Man in the Mirror
A tourist is travelling through Ireland. He stops a local and asked for directions to Dublin. The local earnestly responds: “Well, Sir, if I was going to Dublin, I wouldn’t want to be starting from here”.
There’s wisdom in the answer. It’s not enough to know where you are going; you have a much better chance of reaching your destination if you’re well-placed from the outset.
Financial planning has been trying to be recognised as a legitimate profession for years. So, how is it tracking and is it close to achieving its objective?
Well, I wouldn’t want to be starting from here.
Most clients want independent and unbiased advice
Research consultancy, MYMAVINS, recently asked over 400 Australians about financial advice. The research uncovered high unmet demand for independent advice. More than nine in 10 Australians (92%) agree that it is important that financial advice is independent and unbiased.
Yet, according to the SuperGuide Independent Financial Adviser Directory, there are only 135 truly independent financial advisers Australia wide. That is less than 1% of the 16,000 advisers currently practising in Australia. Why are there so few independent financial advisers when that is clearly what consumers want?
There are legal restrictions on using ‘independent’ to describe your financial planning practice. No one who receives commissions, asset-based fees, gifts or any other form of alternative remuneration from product providers can call themselves independent. No one who has restrictions on the product range they can recommend can call themselves independent. And no one has who has a relationship with a product issuer can call themselves independent.
The trouble is the payment of commissions, asset-based fees, and alternative remuneration happen every day in financial services. And 1% of advisers can’t really expect to easily change the system that 99% of advisers rely on to sustain the economics of their practices.
Need for independent, unbiased advice
That’s a shame because the entire financial system is stacked against the everyday Australian. It’s hard for them to make good financial decisions because the system is so complex. They need to find someone they can trust; someone who avoids conflicts of interests so they can serve their clients wholeheartedly.
Professionals take personal responsibility
It would be easier to join with the 99%.
George Bernard Shaw said “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”
No, we’re not going to join the 99 per cent. We choose to serve. We choose to avoid conflicts. We choose transparency. We choose to be unreasonable. We choose independence.
Encouragement from community helps
Even the unreasonable ones need encouragement to stay the course. That’s why we formed the Catalpa community; like-minded advisers who have made themselves accountable to us and us to them.
Catalpa provides the professional frameworks and enabling structures so advisers can be successful in an independent business model. But it’s hard being part of the one percent; swimming against the tide. Personal accountability is key. The late Michael Jackson said it best 35 years ago, “And no message could’ve been any clearer / If you wanna make the world a better place / Take a look at yourself and then make a change.”
This article is general and does not consider your personal circumstances so it may not be appropriate to you. If you would like advice specific to you, please let us know.
