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”.
CLICK to see the full set of Centric Professionalism in Financial Advice Standards, and the Centric Wealth Professional Promise
“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.
To be fair, self serving articles are the norm on money management, but are generally rare on the professional planner site. However this article is unashamedly self serving.
An organisation that openly focuses on the financial needs of the most affluent families in Australia cannot expect its model or opinions to be meaningful to the average consumers or advisers.
The average consumers struggle in accumulation to pay their mortgage, whilst under insured, then in retirement the average consumer depends on the government age pension to subsidise their retirement. These are not Centric Wealth clients.
Perhaps Centric Wealth has confused the term professional adviser, with the term private client adviser, that is used for the affluent.
Well done!!!
We have found that clients have very different preferences.
Some clients prefer a percentage of asset fees because they want the adviser/firm to have some “skin in the game” on performance. Others want a flat fee.
Our approach, in keeping with the client first principle, is to make either/both available. So, yes we have clients on flat fee arrangements and it is specifically catered for in our policy.
In other words, we happily let the client decide. As long as the methodology is explicitly agreed between the professional adviser and the client, fully transparent, documented and reflects the clients preference, we are happy.
If you want more information about the Centric Wealth Professionalism in Financial Advice Standards you can go to http://www.centricwealth.com.au/liftingthebar/
Congratulations to John McMurdo and the team at Centric Wealth. It is a fantastic initiative and I tip my hat to you on levles.
My only question relates to fees and while, I respect your decision to ban all commissions, including rebates, what is your definition of fee for service? Do you still charge a percentage of assets invested or managed, or have you been truley ground breaking and moved to a fixed or flat dollar fee for a service.
if the second congratulations.
Regards
Davd Price