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RETIREMENT & LIFESTYLE PLANNING | |
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| ISSUE - 17 - APRIL 2003 | |
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How is your advisor paid?
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It is almost impossible for advisers to describe themselves as independent under the new laws (Financial Services Reform Act). However, it’s possible to get independent financial advice when commissions are not charged, or they are fully rebated, and a fee for service arrangement takes its place. For truly independent advice, the adviser should also not be licensed to an organisation that is also a product manufacturer such as a fund manager or bank. That said, it’s not common to find both of these things in a financial adviser. Accountants such as CPAs are suited to provide more independent advice because they have a culture of charging fees for their services, not receiving commissions and they prefer to work for themselves rather than a larger institution. |
Advisers who meet ASIC’s formal definition of independence are pretty rare. The adviser must be free of any actual or potential conflicts of interest created by commissions or ownership. The law requires that all commissions be disclosed. However, commission payments do not necessarily mean bad advice. Our recent survey found that a number of advisers who charged a mix of fees and commissions provided good advice. When looking for an adviser, it’s important to be clear about what you want. Consumers who know what they want get better results. Shop around and make use of the ASIC guidebook, Don’t Kiss Your Money Goodbye, to help you set clear criteria and ask the right questions. |
Yes, you can get independent advice. Your financial planner is a mentor and coach – someone who will put your interests before their own. Professional financial planners take their roles very seriously and want a long-term relationship with you. You also have a role to play. Financial planners analyse your needs and circumstances and then recommend investment strategies and products to meet your goals. They must disclose how they will be paid, the products they can recommend and the relationships that may influence their advice. Having this information will help you to make informed decisions about your money. |
Finance series
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Copyright Retirement Publishing Pty Ltd 2001 -- ISSN 1031-6620 ACN 088 049 218
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