You would assume that acting in the best interests of a client should be a principle that is easy to identify and apply. Unfortunately, this is not the case in the world of Financial Planning, Advice and Management.
What if acting in the best interest of a client isn’t a profitable proposition?
The self- justifying interpretations by institutions and advisers in providing often a very conflicted service at high costs, is at a forefront of complaints and numerous enquiries into the Financial Planning industry.
The industry, not the profession, of financial planning is a monster of enormous proportions and self- interests. It is anchored in thousands of structured products, all designed to capture fees over ongoing and long periods with minimal effort.
In many ways it’s no different to plans offered by energy providers, mobile and internet packages, and insurance products. All based on much the same platform or wholesaler provider, but each one of them with a different marketing strategy and attachable or detachable range of extras to increase profits or capture new clients.
Which commissioned salesmen would ever accept that what may be in the client’s best interest, may not be able to be served by any of the services or products offered by them?
Best interest of the client can only be served by the professional who fully understands the client, their circumstances and needs, and at the same time has a totally impartial knowledge of a complete range of possible solutions.
Unfortunately, in the financial planning industry, many clients have been captured within one product, be that superannuation, insurance or fund management, and then ignored. Profit is always the motivation and the best interest of a client a very arguable justification.
In order to provide advice which is in the best interest of a client, a financial adviser must be detached from any product providing financial incentives.
The advisor must have knowledge and resources which would enable them to provide advice which is currently in the client’s best interest.
The advice and management provided to the client must be ongoing and reflective of the clients changing circumstances which may affect their outcomes.
The advisor must be paid fairly and transparently by the client directly for the agreed services.
The relationship must be able to be reviewed and continued (or discontinued) by both parties without restrictions.
The best chance a client has in having their best interests at the forefront of any form of advice, is when they seek advice from an independent adviser.