Smart Investment Management

The financial planning industry has come under severe scrutiny since the GFC as more and more clients question the appropriateness of the advice they were given after systematic issues were revealed in some of the country’s biggest banks including CBA, NAB and Macquarie. Issues include forgery of client signatures, formal advice documents not being provided and grossly inappropriate investment recommendations to name a few.

Obtaining financial advice can be the best decision you ever make but it can be fraught with danger. You would think that CBA, NAB and Macquarie being reputable institutions would have the right people and systems in place to ensure a client’s interests are being put first. My view is that the advisers were all about selling products, not advice. This created a system of selling and when you put bonuses behind all this, you can see how a client might not get what they really need.
So what should a consumer do?

Learn how to do their own financial planning?
Many people do this by setting up SMSF’s and managing their own investments, but they miss out on so many other strategic benefits of financial planning.

In my opinion, people should seek out a financial planner that is not part of a bank or part of a licensee that is owned by a bank. An adviser should be able to recommend any strategy they feel is in the client’s best interests, and they should be able to recommend any product that is suitable for the implementation of that strategy.
Financial planners that are part of a bank or part of a licensee that is owned but a bank will NOT be able to do this for you!

All financial advisers are required to provide clients with a Financial Services Guide. This sets out a number of important pieces of information including details of any associations or ownership relationships. Here is a list of some of the bigger planning groups and who they are owned by.
You might be surprised.

ADVISER GROUPS INSTITUTIONAL OWNERSHIP
Advisor Investment Services ING
AETUS AXA
Apogee NAB
Bleakleys ING
Bridges Financial Services Australian Wealth Managers
Cameron Walsh Royal Sun Alliance
Charter Financial Planning AXA
Chifley Aberdeen
Commonwealth Financial Planning Commonwealth Bank
Consultum IOOF
Financial Wisdom Commonwealth Bank
Garrisons AXA
Garvan Financial Planning National Australia Bank
Genesys AXA
Godfrey Pembroke National Australia Bank
Guardian Royal Sun Alliance
Hartley Poynton Royal Bank of Canada
Hillross Financial Planning AMP
Investor Security Group Perpetual
Industry Fund Financial Planning Industry Funds
IPAC Securities AXA
KPMG Financial Planning
Lend Lease Financial Planning Westpac
Lynx National Australia Bank
Meritom ING
Milenium Aviva
MLC ING
PACT Accountants Investment Group NAB
Partnership Planning St George Bank
Protax ING
Quadrant ANZ
Retireinvest Garrisons/Challenger
Securitor Financial Group ING
Sentry Westpac
Whitaker McNaught ING
Winchcombe Carson Commonwealth Bank
IOOF

Do you think that every client that deals with the companies on the left know they are ultimately sending money to the business on the right? I don’t think so.

If you go to Securitor, you should not expect to receive a recommendation that Macquarie Wrap is the best product for you. This is because Macquarie Wrap is not on their approved product list. As a manager at Securitor, you want your advisers to recommend products that are going to help the parent business grow. That’s why Westpac/ BT purchased Securitor in the first place. IT IS A WAY FOR THEM TO DISTRIBUTE THEIR PRODUCTS. You will be recommended a product owned by Westpac such as Asgard or BT Wrap.

This simple example is only the tip of the iceberg in terms of the tangled web of agreements and relationships that, whether clients realise it or not, is impacting the advice they receive and ultimately the achievement of their goals. Clients need to seek out advice business that are truly independent, that way they know that the products they are being recommended are at least one step closer to being suitable for them.