The Modern Financial Planner

The Financial Planning industry has undergone a rapid evolution (some may argue a revolution) in the last several years. This process was driven largely by the Hayne Royal Commission, which exposed some very poor practices by sections of the financial advice industry.  

 

Concepts such as acting in your client’s best interests, being paid for actually delivering a service and being well educated, are all quite normal for traditional professional services providers. These changes however have been quite confronting for a lot of traditional financial planning firms, and required them to dramatically change their business models, with many exiting the industry.   

 

Our practice embraces and has operated under all these modern tenets since day one.   

Old Approach

  • A focus on selling products 
  • Advisers paid commission by investment product providers 
  • Very low levels of education required 
  • No mandated ‘best interest duty’, advisers not bound by law to act in the client’s best interests 
  • Very little transparency regarding fees, clients rarely knew what they were actually being charged 
  • Little to no obligation to provide ongoing service 
  • Varying commission rates between investment products, advisers incentivised to recommend one product over another
  • The adviser recommends what suits them i.e. cookie cutter approach, all clients go into the same product
  • Transactional advice without needing to consider the clients greater needs 

Modern Approach

  • A focus on delivering a service 
  • Advisers paid a fee for service by the client 
  • University degree required plus post graduate study 
  • Legislated best interest duty, advisors must be able to clearly demonstrate that advice is in the best interest of the client
  • Very high transparency regarding fees, clients know exactly what they are being charged
  • Legislated requirement to provide ongoing service and regular reviews, otherwise fees cease being payable
  • No commissions payable, adviser has no financial incentive to recommend one investment product over another
  • Tailored advice considering each client’s individual circumstances, goals and objectives 
  • The adviser must consider all aspects of a clients situation and how the advice can impact the client not only today but into the future

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