Crucial Concepts What it means to be a practising member of a - - PowerPoint PPT Presentation
Module 1 Crucial Concepts What it means to be a practising member of a recognised profession What does your client value? post-Royal Commission phone survey about integrity in financial advice 40-55 year olds 38% Sydney, Melbourne, Brisbane
Crucial Concepts
What it means to be a practising member of a recognised profession
Module 1
What does your client value?
post-Royal Commission phone survey about integrity in financial advice 40-55 year olds Sydney, Melbourne, Brisbane Is getting financial advice a good idea? YES. NO.
38% 62%
What does your client value?
post-Royal Commission phone survey about integrity in financial advice 40-55 year olds Sydney, Melbourne, Brisbane Are you getting financial advice? YES. NO.
42% 58%
Said that the genuine independence of a financial adviser is important to them.
The value of independence
Would prefer to pay for their advice directly rather than via a commission Would be more likely to invest in a longer term relationship if they knew their adviser was genuinely independent
86% 83%
How the public sees financial advisers
How the public sees financial advisers
Self interest
The opposite of a profession
Employed by a product issuer Employed by a non-aligned AFSL Empty value propositions Vacuous newsletter Automatically generated portfolio report Offer of a review once a year
Professionalism: what does it mean?
Professional Standards Authority
“Independence and expertise are generally considered key characteristics
remuneration model that is seen to interfere with these two traits of professionalism in inherently problematic.”
Professional Standards Authority
Independence
The first requirement
profession
Independence
The first requirement
profession
Independence
The first requirement
profession
Independence
The bedrock of a profession
Benefits to the adviser
“I no longer feel like a salesperson” “ I couldn’t tell the client what I really believed, give them the advice I wanted to give them”
Benefits to the consumer
“My adviser is a nice person and I like her but I need someone who’s impartial.” “My bank guy can’t advise me, all he can do is sell me things.” “I need a second opinion on my planner’s advice from someone who’s independent.”
Independence
The bedrock of a profession
Corporations Act s923A
must not receive commissions from a product issuer [s923A(2)(a)(i)] must not receive remuneration calculated as a volume of business [s923A(2)(a)(ii)] must not accept gifts from a product issuer that might influence them [s923A(2)(a)(iii)] neither you NOR any adviser under the AFSL you are authorised by [s923A(2)(b)] must not have any additional product restrictions imposed on them by their Licensee [s923A(2)(d)] must not have any association with either a financial product or a financial product issuer [s923A(2)(e)]
Independence
A deep dive
Independence
A deep dive
Conflicts of Interest
Practical tests
Are you dispensing advice … or selling products/class of products? Are your fees reliant on the client following your advice? Do you discount or delay your fees pending implementation? Does your revenue rely on a transaction? How do you profit from the advice you dispense? Is the fee clear & transparent and your terms unambiguous? Is its method of collection agreed before work commences?
Conflicts of interest
Arguments for keeping them
The ‘throw the baby out with the bathwater’ objection The ‘I’m halfway there can you spot me the difference’ objection The ‘head in the sand’ objection The ‘everyone else is doing it why shouldn’t I’ objection
Conflicts of interest
Arguments for keeping them
“You can’t eliminate all conflicts so don’t bother eliminating any.” “I have my own AFSL.” “Charging asset fees is not a conflict” “Hardly anyone meets the independence definition anyway so it should be changed.”
What’s happening in the mind and heart of your client What your client wants from a relationship with you The meaning of independence Conflicts of interest: the slippery slope
Recap …
Arguments for and against maintaining conflicts of interest
Resources
Case studies from the trenches Multimedia links and articles Key questions to ask your client Tips on leading your staff Curly client questions
Crucial Concepts
Resources
Your dashboard FAQ library Members forum Home page announcements Questions for next live event
eCourse home page
Module 2
What you charge for
How to charge fees as an independent
How to calculate your fees How much you charge How to collect fees When you collect fees How you renew your fees
Coming up next …
Homework: fees exercise
Preparing for Module 2
List all clients you derived revenue from last year Calculate the total revenue received for each client Break that revenue down by method collected Specify whether it was one-off or recurring
Final words …
It starts with a simple decision.