The ‘Banking Royal Commission’ is certainly hitting the headlines. Round two of public hearings over recent weeks focused on financial advice and claimed a few scalps at AMP with the CEO and Chair leaving.
Not many are weathering the storm of the Royal Commission well, neither the Banks, Financial Planners, Dealer groups, Financial Planning Association nor even the corporate regulator, ASIC, are without damage.
There were several stories of totally inappropriate advice given by advisors and a lack of action by their employers or their professional bodies.
It is vitally important that people are able to access reliable and trustworthy financial advice and guidance for their lifetime savings. Personal recommendations are a good starting point, but a final choice needs to be made based on independent facts and your own judgement.
Questions to ask prospective financial advisor:
- First Search the ASIC register of financial advisors
- What qualifications are listed? Look for someone who holds a Bachelor Degree, Diploma or Advanced Diploma in a finance related field. Unfortunately, at the moment, the minimum qualification to become a Financial Advisor is RG146, something that could be studied and completed in a matter of days
- Who owns your business?
- Who provides your License to operate?
- Do you have a relationship with any financial institution?
- How are you paid?
- If they are recommending products on which they receive a commission it needs to be the best recommendation for you and it needs to be explained why it suits you.
- What is your investment philosophy?
- How do you report investment performance?
- How do I get out if I change my mind?
I greatly welcomed the Commission. There is no doubt there has been a growth in inexperienced and often unsuitably qualified advisors putting their client’s financial affairs at risk through ineptitude or not acting in their client’s best interest. And all without proper oversight from employers or industry regulators.
The fact that it had to be made Law for Advisors to put their client’s interests first totally amazed me. Putting your client’s interests first is the core of being a Financial Advisor and personally core within my values system. I struggle to understand how an Advisor couldn’t put their client’s interest first unless they were a complete crook.
I can only hope that the result of the Commission is not increased compliance paperwork as this will only continue to drive up the cost of advice. In 2013, there was an increase in regulations and compliance after a Parliamentary Joint Committee Inquiry into financial products and services, but as the Royal Commission proved many problems remain. Perhaps a focus on increased enforcement would be a better outcome this time around.
Should you be looking for financial advice, contact arcinvest and we can start a conversation I hope you ask me all sorts of questions relating to the above. An initial conversation would be free with no ongoing obligation.