Centric Wealth has introduced rules of conduct and professional standards for its financial planners, staff and management that it believes sets a new benchmark for financial advisers.
The Centric Wealth Professionalism in Financial Advice Standards build on proposals contained in the Government’s Future of Financial Advice (FoFA) reforms, and on professional standards promulgated by the Financial Planning Association of Australia (FPA).
The managing director of Centric, John McMurdo, says the FoFA reforms could set an acceptable minimum standard for the industry, but firms that are serious about professionalism must conform to a higher standard.
“We’ve been natural and overt supporters of the Government’s proposed reforms, the Future of Financial Advice reforms,” McMurdo says.
“Along with others in this industry, we realise the need for clear standards. We have a view that those can and should go beyond the recommendations around the Future of Financial Advice, to provide not only a minimum standard, which those changes will bring, but beyond that, frankly, a best practice.
“Australians should have access to the very best financial advice in this market, and be able access that regularly. That’s why we’ve taken the lead and looked to formalise a new best-practice standard for financial advice in Australia.”
McMurdo says the advice standards encompass the FPA’s Code of Ethics “but go on to cover critical areas such as education of advisers, ethics, remuneration policies and governance”.
“This is needed,” McMurdo says.
“Clients are demanding it; good advisers want to be part of these standards, and see a real profession and professional status emerge. The Government is trying to move here, the regulators are endorsing these types of moves and the professional bodies are firmly supporting what we’re doing.
“We invite others to share the journey and build similar positions and continue to extend the profession – that’s why we are doing this”
“We want to send a very clear message, a message to consumers that there is a professional option, one does exist, for people who desire high-quality advice and who desire client-centric advice, and for that advice to be professionally delivered. And we want to be a shining light for that.”
McMurdo urged other planning firms to follow suit, to help the industry combat its poor public image and to convince a broader cross-section of the community of the worth and the value of financial advice.
“We want to share this journey with other leaders in our industry,” he says. “We invite others to share the journey and build similar positions and continue to extend the profession – that’s why we are doing this.”
McMurdo says the advice standards mandate individual membership of the FPA, “not only for all our advisers, but all our advisory staff and management”.
“All of us are individual members of the FPA,” McMurdo says.
“All of our advisory staff have signed a Professional Promise, which speaks to our ethics and how we deal with clients in the most professional manner. It’s been signed universally by all our advice staff – and they’ll do that annually, and recommit to those promises.
“We have as a policy that all significant advice in this firm is signed off by a CFP [Certified Financial Planner]. Something in the order of 35 to 40 per cent of advisers in the country are CFP-qualified; all significant advice coming out of Centric Wealth will be signed off by a CFP.
“We have formalised our remuneration policy, which simply is to provide advice that cannot be influenced by remuneration paid by product providers. Hence, we elect to be paid a fee for out services, rather than receive commissions.
“And we’re pleased also to make clear that we’ve instituted within the firm a Professional Standard and Ethics Committee, chaired by one of our non-executive directors, Chris Cuffe, and we’ll have external representation from a different professional service membership.”
McMurdo says the policy is in place now, and applies to existing clients as well as to new clients. The FoFA proposals, in their current form, come into effect on July 1, 2012, and apply only to new clients.