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Independent Financial Advice

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With the Banking Royal Commission in full swing, there’s been a renewed focus on the separation of advice from businesses that manufacture financial products.

People are rightly concerned at the seemingly never-ending cases of poor advice given by banks who recommend the products they make and call it “financial advice”.

Former ACCC chairman Allan Fels weighted into the debate recently. “There’s just a deep conflict of interest between creating financial products and then giving independent, or so-called independent, impartial advice,” he said.

But, does removing vertical integration lead to independent advice?

Not by itself.

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Who's Really Paying Your Financial Adviser

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Despite a series of financial planning scandals over the last few years, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has shocked the country as it uncovers extraordinary levels of dishonesty and unethical conduct.

Many people are probably wondering if they should trust anyone in the financial services industry ever again.

If you’re one of those people, I understand how you feel.

To help you make sense of what’s been uncovered, over coming weeks, I’d like to break down some of the individual stories to help you understand what happened and how you might avoid similar problems.

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Photo Credit: thehareandparsnip Flickr via Compfight cc

If you read newspapers, you’re aware that the financial advice industry struggles to manage conflicts caused by ownership, targets and remuneration. Accountants, as a profession, have generally managed to avoid these conflicts by not providing financial advice to their clients. Instead, accountants refer clients to specialist advisers and mortgage brokers.

It seems like a good strategy. Is it really?

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Using a fee based broker who gives back commission will take years off your mortgage

               Photo Credit: claudia.susana

 

Failing to use a mortgage broker who will refund commission is one of the biggest mistakes people make when they choose a loan. 

Commission refunds are probably the easiest way to put $10,000’s back into your pocket over the life of your loan – reducing your loan term by years, if you use the cash to make additional payments.

It’s the strategy that’s possibly the most effective and least utilised, as not many people know about it, or how to use it properly.

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