Amid the abysmal Australian banking inquiry following AMP’s misconduct, the financial advisory sector remains a sea of uncertainty, with the big banks scrambling to locate their lifejackets; namely, executives and investors awaiting the repercussions, and the potential impact on both the market and future consumer proposition languishing.
And it’s been quite a storm all-round, with reports of more than 300,000 of AMP’s clients charged for non-existent advice, Commonwealth Bank pocketing fees from deceased clients, and more than 5,500 submissions of misconduct across the financial sectors brought to the commissioner’s attention.
Calls to boycott the big banks sit somewhere between unfeasible and futile given the innate nature of their entrenchment within the investment realm. The big question: With a prevailing culture of mistrust and uncertainty, how should those who rely on financial advice now proceed?
The short answer – starting at the most accessible end of the food chain – is to do your diligence. In other words, if you can’t outmode the beast, the safest course of action is to ensure you work with an adviser who is operating ethically and with consciously good conduct within the broader system. There is, after all, no brush that tarnishes every planner – like any industry there is a spectrum of ethics and practice.
So what does that due diligence look like? There a multitude of ways to search for and research an adviser – a good starting point is the Financial Planning Association (FPA)’s ‘Find A Planner’ tool. The FPA’s members need to meet certain criteria in order to maintain their membership and are thus more likely to be proactive about upholding a certain standard of service.
That said, the best indicator of being able to instil confidence in an adviser is insights obtained through word of mouth; find out what their client’s experiences have been and what the industry is saying about them. Further, it’s entirely reasonable to ask an adviser directly what their speciality and qualifications are, as well how their code of conduct is framed and executed.
An initial meeting with an adviser should result in you feeling comfortable – much the same as if you were engaging a new accountant, broker or healthcare professional. According to the Financial Planning Association, the ability to build a rapport quickly combined with “good advice” that’s “concise and easy to understand” are good metrics to start with. In the spirit of age-old notions such as word of mouth, your intuition goes a long way.
Inevitably, the royal commission will soon come to a completion and hand down its recommendations. The relevant industry bodies will take these recommendations on board and policy will shift and tighten to better protect the consumer. If anything, as catastrophic as the misconduct is, it has cultivated an arguably overdue industry shake-up.
In spite of the state of the financial sector, the operative message here is that not all advisers are the same. Finding a trusted one who prides themselves on working ethically and who will partner with you in anything but a transactional manner – this is the way forward.