Four Simple Steps to make sure you get the right financial advice for you.

The financial planning industry in Australia is riddled with conflict and vested interests.

From 1st July 2016 Priority1 Wealth Management group is proud to offer all new clients only true independent advice. We have also committed to transitioning all existing clients to the new independent model as soon as possible.

Revelations of investors finding that their hard earned savings have been eroded or decimated by inappropriate financial advice have become more conspicuous over the past few years. The stories of loss and the associated anger have been filling our print, radio and television media. Financial planning in Australia has evolved into an industry that is now rife with vested and conflicted interests. While many investors have been well served, it is apparent that financial advice has been directed to meeting the strategy of maximising profits for the business rather than protecting and growing the investments of their clients. Recent attempts by the Federal government to change the industry now appear to be faltering and many believe the changes will do little to protect you, the consumer. So what is the answer? How do you make sure you get advice that is in your interest only? The answer is simple. By following these steps you will be working to ensure you are selecting the right adviser for you.

Step One: Select an adviser that operates their own licence

A business owned by an institution that sells products creates an immediate and obvious conflict of interest.

Make no mistake. Institutions including banks, insurance companies and industry funds have a financial planning arm as an important strategy of their business operations. In our opinion their primary goal is to simply sell their product and thus enhance their profit.

Step Two: Select an adviser whose business is 100% privately owned.

Many “boutique” advice businesses have ownership partners, including institutions. Again, the objective is to sell more products. Ask if the adviser has ANY affiliation with a financial institution or product provider, including banks, insurance company, and industry funds. Be careful on this one. A lot of advisers have arrangements in place with product suppliers. These include grandfathered volume arrangements and trail commission payments as well as other benefits such as software, office support and other services.

Make sure you ask. If they have any arrangements whatsoever, you can decide to walk away.

Step Three: Select an adviser who provides 100% independent advice.

Steps One and Two are simply not enough. Many in the industry claim that there are two models of advice – Institutionally owned or “independently owned”. However, many “independently owned” advisers still DO NOT provide independent advice. They still may have arrangements with institutions, receive commissions or charge percentage based fees. So what is independent advice? The answer is simple. The adviser does not accept ANY commission or volume arrangements. The adviser does not retain ANY income paid by anyone other than the client. This means NO Commission – including insurance commissions. Any receipt of commission immediately creates a potential conflict of interest.

Step Four: Select an adviser who charges a fixed flat dollar fee for the services the client actually needs.

If your adviser operates on a “fee for service” basis yet charges percentage of assets based fees, walk away. Percentage based fees can simply be a commission by another name. This creates an immediate conflict in that the more of your funds that go into a particular pot the more the adviser gets paid. The services probably haven’t changed, the complexity of the strategy probably hasn’t changed, yet the adviser gets paid more! So it simply comes down to this. Choose an adviser that;

  • provides 100% independent advice
  • operates under its own licence and is 100% privately owned
  • has no affiliation with, or ownership by, any financial institution or product provider
  • charges a fixed flat dollar fee for the services that the client needs and does not accept any commission or volume arrangements

If they do not meet these requirements, walk away, change your adviser.

You are now closer to seeking a planner who can and will provide genuine financial services in your interest.