Independent Advice Matters

In the financial world, independent advice is defined as ‘advice that is not tainted by a bias in favour of any particula
r company’.  Under current Australian Financial Services Licensing law, the words ‘independent’, ‘impartial’ or ‘unbiased’ are protected terms– so it is illegal to call advice independent if:

  • an adviser is employed directly or indirectly by a financial product provider, or
  • receives commissions from them without rebating it all to the client, or
  • receives other gifts or other benefits from them which might influence their advice.

We find that independent advice usually creates peace of mind and potentially better outcomes.

The Research

The latest report from Roy Morgan Research ‘Superannuation and Wealth Management Australia’ shows that during 2014, advisers linked to the large institutions continued to heavily use their parent company’s in-house financial products.  For Westpac/BT it was 82.4%, 71.3% for CBA, 68.4% for AMP and 47% for ANZ.  Roy Morgan said this figure was broadly consistent over the past four years but had risen last year.

The survey also showed that clients remain unclear about the independence of their advisers, with many still unaware about institutional ownership.  The research found that major licensee groups that were owned by an institution but traded under a different brand name were still viewed by their clients as independent, despite that ownership and resulting investment advice behaviour.

For example, 54% of Commonwealth Bank-owned Financial Wisdom clients surveyed believed that business was independent. Similarly, 51% of NAB-aligned Godfrey Pembroke and 46% of ANZ’s RetireInvest clients seem to believe they are independent.  Clients were also confused about identifying independence when a planner comes directly from a major fund manager – 25% of AMP customers consider them independent.

Roy Morgan Research said that “It remains to be seen whether the Future of Financial Advice (FOFA) legislation will have any impact on these numbers, as the large licensee groups are generally restricted to recommending funds from their Approved Product Lists.”

According to there are only 61 advisers in Australia that can call themselves truly independent and according to their research, we’re the only independent advisers in South Australia.

Does independent advice matter to you?  Are you able to evaluate and compare financial solutions?  Do you even bother?  If not, the comforting thing is that you will never know what you could have achieved with different advice.  For the Roy Morgan research year after year for many years now, it seems many people don’t understand what independent advice is and where to get it.

If independence matters to you, Wotherspoon Wealth is one of the few firms in Australia that does provide ‘independent investment advice’.  It is illegal to claim this unless it is true – you will find very few advisory firms claim this.  Many use the term independent in slightly different ways to suggest independence and unfortunately the under-resourced regulator is hard pressed to adequately police this.  As to a Royal Commission into behaviour in the financial advice sector, the lobbyists have been busy – bank lobbying of the Coalition and industry super lobbying Labor.  Neither welcome the difficult questions that need answering.

We’re an advice Business…

…with no other product to sell and no conflicts of interest.  Being independent doesn’t mean being an individual.  We work with your other advisers to integrate the multi-disciplinary skills of financial planners, tax and legal professionals to create comprehensive advice in investing, superannuation, self-managed super (SMSF), life insurance and estate planning.  Our team is stronger than any one individual and collaboration ensures our results are greater than the sum of the individual parts.

We’re passionate…

 About building high performance investment portfolios and holistic wealth management plans individually tailored for the unique needs of our clients.

We believe…

This can only be achieved with a transparent advice model free from product bias and conflict of interest, delivered by the best advisers in Australia.

It’s all about our Clients

We have amazing clients and we truly value them.  We want to be able to provide the best advice we can and in no way be biased or influenced ni provision of our advice… Everything we do is designed to improve your overall wealth position and increase certainty in your financial life.