I've been following the Australian Financial Services Royal Commission (specifically, the "Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry") with great interest.
I'm not happy with all of the misconduct that has taken place. But I am delighted that it's coming to light.
Some people in the financial advice industry think that nothing good can come from this - that it erodes trust in all financial advisers, even those who genuinely put their clients' interests first.
I couldn't disagree more. This is terrific for financial advisers who are committed to providing high quality services, and are prepared to structure their businesses in ways that align their interests with those of their clients.
In the long-run, these types of scandals can do a huge amount of good. Because it weeds out the worst actors and conduct, and encourages those who remain in the industry to hold themselves to a higher standard.
Frankly, it shouldn't surprise anyone that financial advisers who are affiliated with financial product issuers will have incentives to recommend (<ahem sell>) the products of the companies they're associated with.
One of the reasons I'm in business is to protect Kiwis from this sort of behaviour. When I see sales spiels masquerading as advice, it gets me angry. I think it's unconscionable that in some cases, Kiwis end up being charged significant fees for the privilege of being sold financial products.
I have a LOT more to say on this, and if I can find some time I'll probably record my thoughts in podcast format.
The Royal Commission has made me feel absolutely vindicated for the business model I've adopted with Fairhaven Wealth.
I go far beyond being fiercely independent. One of the reasons I'm fixed-fee is that I don't have some of the conflicts that are associated with other forms of remuneration such as asset-based fees. And one of the reasons I am advice-only and do not implement advice is because it makes me even less conflicted.
I've structured my business so the interests of my clients are first and foremost. My conscience wouldn't have it any other way.
If there's a better business model for aligning my interests with those of my clients, please let me know.
The Royal Commission in Australia, as well as a few personal experiences recently (including a close friend being diagnosed with lung cancer), have invigorated my resolve to stand up on behalf of Kiwis.
This has motivated me to make my recent submissions in relation to the Code of Professional Conduct that will soon apply to all financial advisers.
It has also motivated me to make complaints to the Financial Markets Authority (FMA) when I see other organisations failing to do what I consider to be the right thing. For example - advertising themselves as independent, when they are partially owned by financial product issuers; and providing investment planning services they are not authorised to do so.
Sunlight is the best disinfectant.
I commit to being a bulldog, protecting Kiwis in relation to getting good outcomes when dealing with other organisations in the financial services industries.
If you have questions about whether the conduct of other organisations is appropriate, ask me. I'm happy to tell you what I think, informed by my background as an Authorised Financial Adviser and former financial services lawyer. I can tell you where to go if it should be pursued further.
Mary Holm's recently spoke with Jesse Mulligan about how to find a good financial adviser. She provided sound advice. You can listen to it her podcast, or you can find it here. Mary's list of financial advisers is one of the first places I'd recommend people look at when looking for a financial adviser. (Full disclosure: I'm on that list.)