Hope is a wonderfully positive force but, over a year of business, it can be aggressively challenged.
I love hope, and want to share it with every business owner or financial planner I come in contact with. And for me, 2010 is going to be my best year ever and it will be driven by my passion to build Switzer Financial Services – my business. To achieve great growth in a business, Edward de Bono told me that you have to have a competitive advantage and that should come out of lateral thinking, or thinking outside the square.
My competitive edge, which I want to share with other planners, is our strongest asset. It’s why people come to us – and it’s not our knowledge, though this is critically important. People trust us because they think we are honest. We cannot betray this trust.
Over the holidays, with the Federal Government running more reviews into our industry and our spheres of influence than you can point a stick at, I thought it was time that we, as a group, committed to a Charter of Honesty. Here’s what such a Charter means to me. Of course, I’d be glad to hear from you if you have some better ideas.
- You will have a “Charter of Honesty” with your clients, and act in their best interests at all times;
- You will be expert, credible and up-to-date with industry, regulatory and market developments;
- You will charge your clients on a flat fee or “fee-for-service” basis, except where your client prefers you accept a commission;
- You will be truly transparent about any fees, charges, commissions and platform rebates, and explain these to your client in a simple and easy-tounderstand manner;
- You will recommend the most appropriate product to your client, having regard to the client’s investment objectives and goals, financial needs and personal circumstances, appetite for risk and understanding of investment markets;
- You will be independent of any institutional provider of product – or, if aligned, recognise the potential for inherent bias, and disclose this upfront to your client;
- Your “recommended product list” will be soundly researched, institutionally agnostic and recognise the importance of product fees and charges in long-term investment performance;
- You will not accept “soft dollar benefits” from product providers, such as sponsorships, marketing support, excessive entertainment or conferences, which are provided to influence your objectivity;
- You will act to enhance the profession of financial planning; and
- You will at all times obey the other nine commandments. Commandment three is one of the thorniest issues facing financial planners.
The key industry bodies are now highly supportive of the “fee-forservice” model and against financial planners being commission recipients. Of course, there can be problems with the “feefor- service” model, as it can encourage planners to care only about the “funds under management” key performance indicator, which can run contrary to the interests of clients.
Given some clients’ appetite for risk, personal preferences and goals, the better recommendation might be to invest in property, but many planners do not objectively look at real estate, as it can be at odds with their targets for funds under management. The best-of-breed financial planner has to confront this big issue and have a policy for dealing with it.
The policy should be simply put: “The interests of the client come first.” The old financial planning model did not encourage the best-of-breed business practices. The money ticked over and rolled in as customers’ commissions and fees created a booty that kept many planners in their comfort zone.
This not only affected their clients, but also the planner’s potential to grow their business. There is not a business growth book that ever applauds doing business in your comfort zone. Earlier in this article I predicted that this will be the best year for Switzer Financial Services as we plan to grow by attracting a band of planners who want to follow the Charter of Honesty outlined above and will be happy to work under the Switzer brand.
For a couple of years now, numerous planners have approached us to extend the Switzer brand name to other planners, but we needed to do some groundwork before that was possible. So 2010 will be the year, and I look forward to meeting other planners of like mind. Have a great 2010 and all the best!
