Advice professionals don’t take commissions.
The latest twist in the Future of Financial Advice exposes even more what the real debate is about – trust. Not reducing red tape.
ASIC reckoned a couple of years ago only 18% of Australians sought out an adviser. Last year Goldman Sachs conducted a survey that showed only 10% sought an adviser.
Australians are ignoring financial advice because it’s conflicted. Like a family member trying to flog Amway products, Australians are cringing away from the conflicted industry that they believe financial planning has become.
The GFC was the trust-breaking point for financial advice around the world. Together with Storm, Westpoint, Trio, enforceable undertakings on big brand advice groups, Australians have had enough.
Little wonder they are flocking to self-managed super funds ($531b in 520,000 funds and growing) for ‘greater control’ and ‘better fees’. (As any student of behavioural finance will tell you, that’s another story of the well-intentioned punters dangerously playing in the traffic with their life savings and the odds stacked against them).
How the incumbent banks, insurance groups, accounting and advisory associations believe they are addressing the fundamental abandonment of financial planning by their endorsement of a watered-down FoFA is beyond me. When they justify commission-based pricing they sound like the climate-sceptics.
The inherent conflicts in financial planning today extent well beyond commission-taking.
Commissions are the tips of the financial icebergs of conflict blocking the passage to better financial futures for everyday Australians. Below the commissions under the visible surface these ‘conflict icebergs’ are built upon years of deep and embedded knowledge about financial products and their design not understood by everyday Australians. There isn’t a level playing field that allows everyday Australians to understand the costs and value of financial advice.
No wonder they have little confidence that their best interests are being served.
Australians despise conflicts of interest and due lack of alternatives when seeking financial advice they are bravely (and usually naively) taking on the leadership of their own financial futures via self-managed super funds.
Advice professionals don’t take commissions.
Re-think FoFA Mr Sinodinos.
About Jim Stackpool
For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.