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When an apology isn’t good enough

John Hewison
Founder and Director
18 Jul 2017

If you find apologising difficult, spare a thought for National Australia Bank. NAB are being forced by the Australian Securities and Investment Commission (ASIC) to apologise to around 150,000 of their financial advice customers for misleading conduct in failing to disclose the “cross-selling” of its products by bank employed financial advisers.

This is yet another example of the need for a complete disconnect between financial product manufacturers and those providing financial advice.

To state the obvious. Institutions who have a vested interest in manufacturing and managing packaged products for generating massive amounts of income for themselves should not be in the business of providing strategic advice to customers. Not only is there is a clear conflict of interest, there is a clear conflict of motivation and intent.

If a corporation generates the bulk of its revenue from the sale and management of financial products, the sale of such products will always be their primary objective as it’s the source of their profit.

By contrast, independent professional financial advisers are focussed on providing quality strategic advice and managing their clients’ affairs, totally devoid of any product influence or bias. Their revenue is generated by charging clients for the services provided.

Management and employees of large corporations are incentivised on the achievement of financial targets, that is, the profitability they generate for the mother ship. Independent financial advisers are judged and rewarded by the satisfaction and retention rate of their clients.

There is just no feasible argument that can justify the continuation of product manufacturing institutions masquerading as unbiased financial advisers. They are not and never will be. And frankly, yet another apology from yet another large financial institution is not good enough.

The fact is there is far less money to be made for institutions to commercially justify providing unbiased financial advice. After they pay their adviser and all the compliance and associated on costs, there is nothing left financially for the provision of independent advice. The money is made from clipping the ticket on funds directed by advisers to their employers’ financial products. And that is a multi-billion dollar industry.

So, unless the large institutions are forced, there’s little hope they will ever provide unbiased financial advice.

Sadly, for the rest of us, the financial and lobbying power of big business gets the ear of politicians and results in unfair influence. We need some champions in Canberra to see the facts and act accordingly.

How many more examples do our politicians and regulators need to convince them to break this evil connection between advice and product? How many more innocent Australians need to be misled and financially hurt before they are given the protection they deserve?

My colleagues and I are proud to be independent professional financial advisers to our loyal clients. We see ourselves as protectors as well as wealth creators on behalf of our clients. Our entire firm has only one focus – the wellbeing of our clients. Yes, part of our role is achieving outcomes through strategy and investment but we have no vested interest or bias in any financial investment structure whatsoever, other than the benefit to our client.

In my view, any financial advice that has anything other than the client’s interest as its core focus should be eliminated.

The end game of financial advice is the protection of the financial future of Australian families. It is not about feeding the insatiable appetite of corporations. Australians deserve to seek advice from trusted independent professionally qualified advisers. And it’s up to the powers that be in government and regulation to ensure this. There needs to be a disconnect between financial advice and selling a product.

John Hewison is the Chairman and Founder of Hewison Private Wealth. A Melbourne based financial planning and wealth creation firm with over 30 years experience. Hewison Private Wealth are specialists in financial planning, investment advice, property investment advice and self managed super funds (SMSF).

If it’s independent, unbiased financial advice you seek, contact one of our CFP qualified on 03 8548 4800 or info@hewison.com.au   Or visit www.hewison.com.au

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.