Recent research from Roy Morgan has revealed that many financial planning clients are confused about the independence of their adviser.
According to the research, many clients mistakenly perceived their adviser as “independent” – unaware of the relationship between their adviser and a parent company, especially where their planner does not use the branding of the institutional owner.
For example, 51 per cent of clients of Financial Wisdom considered their financial planner as “independent” even though it is wholly owned by the Commonwealth Bank.
Similarly, 48 per cent of Godfrey Pembroke clients perceived the group as independent, even though it is owned by NAB. And 37 per cent of Retireinvest (owned by ANZ) clients and 33 per cent of Count (owned by CBA) clients believed their adviser was independent, respectively.
Further Australian Securities and Investments Commission (ASIC) recently expressed concerns about the ownership of advisers by product issuers, and the fact that the majority of their income was derived from product issuers. Research has uncovered that the product recommendations of institutionally owned advisers include more than 75% of the parent company’s own product. This is not surprising when you consider that many institutionally owned financial advisers are subject to sales or revenue targets and bonuses.
Why does this matter? Because these factors can create potential and actual conflicts of interest, especially where advisers recommend products issued by a parent company or other related party.
Who owns your financial adviser? With most advisers being owned by fund managers, it is critical that if you are seeking independent ownership in your adviser that you actually achieve this – and you are not sidelined by branding.
If you want high integrity advice, where you can trust that your adviser is on your team, and that any product or investment recommendation is in your best interests, then we firmly believe that you need to find an experienced adviser with no ties to a product manufacturer – none at all.