Are financial planners and mortgage brokers that bad?
The test of the value of this Royal Commission is going to be what authorities do to change what happens in the finance industry. What is being revealed is not new knowledge — it’s just being made more public.
by Peter Switzer
Anyone like me who works in finance knew that financial planning had its problems. But I still doubt ASIC’s Deputy Chair, Peter Kell’s submission that nine out of 10 advisers are not considering the best interests of their Self-Managed Super Fund clients. Meanwhile he says three-quarters of advisers don’t comply with the “best interest” test for their customers.
Let’s get this straight, I have always publicly decried many of the practices that previous governments have ignored abut financial planning but when there have been efforts to improve the industry, they have increased the workload of advisers to such an extent that it was nearly impossible to charge a decent fee to justify the time and risks of advising someone.
I started my financial planning business when it was like the wild, wild West in financial planning. There were under-the-table kickbacks or secret commissions, products were recommended that suited the adviser and not the client, but, worst of all, it was hard to do it the transparent way.
I know because when I started my business I did the opposite of most planners — we rebated commissions and charged a flat dollar fee — and it resulted in some surprising revelations.
First, insurance companies made it near impossible to weed out the commission you got from recommending a policy.
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