Royal Commission Report
In light of the release of the final report on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry there has been a focus on the impact on the banking industry. As a Financial Adviser, I thought it would be important to address this from a financial advice perspective to provide some insight into our thoughts on this.
In summary, the main purpose of the royal commission was to investigate the issues of profiteering off of alleged misconduct and whether client’s best interests have been put first, in front of the financial service entity’s bottom line. Here at Solace Wealth Management we whole heartedly support these investigations to ensure client’s best interests are being put first and to maintain integrity and professionalism within the financial services sector. There have been a number of cases which have proven that advice was provided which was not in the best interest of the client. These Financial Advisers should be made an example of to stamp out unlawful and unethical misconduct.
The royal commission has investigated the issues surrounding ‘vertical integration’ within the banking system, where the financial adviser is employed by the product provider (namely a bank). This structure usually results in the bank’s financial products being ‘sold’ to clients with potentially limited consideration given to the clients best interests and if there are alternative products or strategies available that may be better suited to the client, or ‘selling’ financial products that the client doesn’t necessarily need. Solace Wealth Management is an Authorised Representative of MyPlanner Professional Services, a non-bank aligned licencee. This gives us the flexibility to consider all financial products on the market, and recommend products and strategies only those in the best interests of our clients. We want to engage with clients to help them meet their long term financial objectives, short sightedness and short term profit focus does not align with our business goals, nor does it instil the integrity and ethics we strive to demonstrate.
The fact that these issues have been investigated is a positive step towards maintaining integrity within the industry that we are passionate about. However, a number of recommendations have been made which step outside the scope of the purpose of this report and will likely have devastating impacts on thousands of small businesses. When a commission paid product is recommended to a client, it is done so after completing thorough research into the clients situation, best interests, alternative products and strategies available, and most importantly – affordability. A financial adviser is able to provide more affordable financial advice when there are alternative forms of remuneration available. If we need to charge our clients higher fees on top of their insurance premiums, suddenly financial advice becomes unaffordable for those who need it most and families will fail to have adequate protection when they are at their most vulnerable.
As these recommendations are legislated, I just hope consideration is given to how both clients and small business will be impacted. Here at Solace Wealth Management we hope to be providing affordable financial advice and meeting the long term goals of our clients for many years to come. If you would like to discuss getting your finances on track or our advice process, please contact Kate Trost at Solace Wealth Management on 0423 313 486.
