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Independent Financial Advisors

“There is inherently a conflict between manufacturing a product and supplying a product but then having an advice network or advisers who are supposed to be providing advice in the best interests of the clients.”

Former ASIC Deputy Chairman Peter Kell.

In theory, it’s possible to manage the fundamental conflicts at the heart of vertically integrated businesses. In practice, as the Banking Royal Commission has found, the clients’ interests simply don’t seem to matter.

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Photo by rawpixel on Unsplash

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 weighed 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

Photo by Randall Honold on Unsplash

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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