We have all been concerned about recent news emanating from the Financial Services Royal Commission and the confidence of Australians to receive trustworthy, thoughtful and appropriate financial advice. The appalling behaviour of many corporates and advisers has sometimes resulted in a devastating financial impact on investors.
Some of this behaviour is the result of the vertical integration model that exists across the financial planning industry – the bank or financial institution employs the financial planner, owns the platforms that the financial planners use, owns and manages the funds where the client’s money is invested and owns the insurance company that client’s use for their personal protection cover. And a few years ago, they even owned the businesses that clients used for their estate planning. This worked well for some clients who appreciated and valued the ability for all of their financial affairs to be looked after in the one place, but you can see the potential for conflict of interest.
This is not limited to the big banks or financial institutions, but also several industry super funds have similar types of conflicts. Often industry fund financial advisers are employed by the industry funds and are only able to recommend their own super funds and the investment options within.
A desire to step away from the vertical integration model that exists within the major banks and institutions was what led me to establish Your Family CFO in 2016. Whilst undertaking my due diligence as to whether I wanted to be self licensed with my own Australian financial services licence (AFSL) or join a financial services licensee, one thing I was clear on was that I did not want to be associated with any product provider or manufacturer. I wanted to be able to work in the best interests of my clients. Ultimately I decided to join FYG Planners and operate under their AFSL. The additional compliance and administrative requirements of operating my own AFSL did not appeal. In addition, I was attracted to the idea of joining a group of like-minded individuals and businesses who similarly put their clients at the heart of everything they do.
Our AFSL or financial services licensee, FYG Planners is privately owned and has no connection to any bank or institution. FYG Planners has no in-house products so there is no bias towards any financial product. The goal of FYG Planners is for the advisers under their AFSL to build their financial planning business with their client being the first priority. An outcome that seems to have continually eluded the banks and institutions as they’ve adhered to their vertically integrated business model.
FYG Planners encourages only the best financial practices. Every year many financial advice businesses look to change their licensee. Hundreds approach FYG Planners for licensing. Upon scrutiny, FYG rejects around 99% of the financial advice businesses they are approached by each year. It is a select licensee based on ethics, trust, investment philosophy, skill and personality.
The 42 firms under the FYG licence meet twice a year to continually update skills and keep abreast of best practices to better serve clients. This isn’t just limited to conferences, FYG has a massive knowledge base available and all firms are committed to supporting their fellow advisers. The overriding goal is providing clients with objective advice and personal solutions, which incorporates a structured and proven approach to investing and a fiduciary-based financial planning and wealth management service.
Financial success is not about being lucky, but about being prudent about creating and preserving wealth. We believe clients should focus on what they do best and consider delegating the rest, but it is vital that they can find and rely on a trusted adviser to guide their lifestyle, financial and investment decisions.
The recent revelations from the financial services royal commission highlight this so clearly.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.