Imagine what it would be like if doctors were paid by the drug companies and not by their patients. Imagine if they were paid a commission based upon the amount of drugs they prescribed.
Is this a model that would benefit patients?
Would you want your own GP to be remunerated like that?
Of course not. It would be fool hardy to have a system that fosters an inherent conflict of interest. You wouldn’t want your own doctor to be working for Big Pharma companies, would you?
Imagine a similar scenario with financial planners. Do you want your financial planner to be working for the superfunds and insurance companies? “No” seems like a pretty obvious answer. You want your financial planner working for you.
Most financial advisers in Australia are in a relationship with a large financial institution such as a bank, superfund or a life insurance company. This relationship may be because they are directly employed by these institutions, or because they are licensed to provide advice via them. This has the capacity to create bias and conflicts of interest, given how the advisers are remunerated and the limit offering of products to recommend to their clients.
It’s important to note that not all financial planners operate under this model. There is a small but growing number of financial planners in Australia who are classed as Independent. These Independent Financial Advisors must meet the following criteria:
When you pay an Independent Financial Planner, you know that your planner is working for you, and only you.
Does that mean that non-independent financial planners are giving bad advice? No, absolutely not. Most financial planners give excellent advice and they make their clients’ needs their top priority.
However, most financial planners are operating in a bad system - a system that is broken and fosters an inherent conflict of interest between the client and the planner. It’s time to change this system. It’s time to insist that your financial planner cut ties to the banks and product providers. It’s time to insist that your planner work for you, and you alone.
To find an Independent Financial Planner in your area go to:
This blog contains general and factual information and does not take into account anyone's individual objectives, financial situation, needs or tax circumstances. We strongly recommend you contact one of our Advisers if you would like personal advice.
Redpoint Investment Holdings Pty Ltd (trading as CY Financial Advice), is a corporate authorised representative (No. 378099) of CY Financial Services (AFSL No. 509648)