Trusted financial advice is a myth for too many Australians. It’s practically impossible to discern a trusted financial adviser. This is particularly frustrating, given that compulsory superannuation was introduced more than two decades ago and, since then, the industry has failed to build credible, trustworthy firms filled with talented and ethical professionals.
There are many stellar advisers who act as ringmasters for their clients’ total financial affairs, but they’re in the minority. Clients who are fortunate enough to have one of these advisers are likely to have stumbled upon them by good fortune, because there’s no effective way for consumers to identify a professional adviser with the right skills and approach to remove financial complexity and deliver the certainty they desperately want.
Indeed, consumers have no idea what really matters and what to look for when shopping for a financial adviser. If they believe the industry’s propaganda, the Australian Securities and Investments Commission’s (ASIC’s) financial advisers register is a tool to help them identify a creditable adviser, based on the fact they have a Diploma in Financial Planning or the Certified Financial Planner (CFP) designation and haven’t been banned or disqualified by the regulator.
Informed decisions
However, the limited information available on the register fails to help consumers make informed decisions. It doesn’t list the payments an adviser may receive from a product manufacturer or related entity, such as platform rebates or sales bonuses for salaried advisers. It doesn’t list any financial arrangements between an adviser and product manufacturer, such as discounted interest rates or a buyer-of-last-resort contract.
These deals can and do influence advice, and are critical pieces of information to empower consumers to make wise choices.
At the most basic level, the register doesn’t even tell consumers if an adviser specialises in one area such as insurance, self-managed superannuation or direct equities, and is therefore more likely to recommend a specific strategy.
Consumers need a different paradigm to embrace financial advice. Today’s proposition is still too product and distribution orientated. The new advice proposition should revolve around one trusted source to oversee a complete solution for the client’s unique circumstances without any bias to a particular product, structure, manufacturer or advice speciality. Most advisers don’t believe that clients will pay for the new advice proposition. However, clients will pay if they can see the value.
Not the game changer
By that definition, CPA Australia isn’t the game changer it’s postulating itself to be. Many of the accountants who will be attracted to CPA Australia’s licensing offer will come from a traditional transaction-based accounting background. They’ll either already provide advice on self-managed super or be seeking to get into that space. They’re focused on the numbers and looking after their clients’ money – not necessarily looking after clients. Their value proposition will mirror what accountants currently do, which is help their clients establish the most tax-effective structures and invest their wealth. That will only provide them with entry to the advice industry. It won’t catapult CPA Australia Advice and its members into the premier advice brand of the future.
The latest changes proposed by the Financial System Inquiry, the Trowbridge Report and the Parliamentary Joint Committee (Fawcett Inquiry) wouldn’t put the industry on the right path either.
The solution is to reinvent advice and educate consumers about what the advice process should look like and ultimately deliver. It’s not another product, although many regulators, advisers and manufacturers still think like that. In most cases, that will bear little resemblance to what they’re likely to experience today.
The modern adviser should provide a comprehensive service and manage their clients’ total financial affairs in a consistent, methodical and measurable way. They should provide ongoing service, reassurance, wisdom and value as they go on the financial journey with their clients.
Adviser certification
To help consumers find such an adviser, Certainty Advice Group – formerly Strategic Consulting and Training – has established and trademarked a new Certainty Adviser designation with IP Australia and is in the process of gaining a certification mark from the Australian Competition and Consumer Commission.
So far 20 advisers have been invited to apply for the designation, but membership will eventually be open to aligned and non-aligned advisers and accountants who meet four key criteria. They must serve the public good; they must aim to act as the ‘ringmaster’ in their clients’ lives; they must not receive any revenue, or accept any financial benefit, from a product or service provider; and they must adopt the fee and disclosure rules set out under the Accounting Professional and Ethical Standards Board’s original APES 230 standard (before it was significantly watered down).
The future of advice won’t be about growing superannuation balances or maximising wealth. The new advice paradigm will be based on a long-term partnership between a client and trusted adviser. The adviser and their team will become the client’s main reference point for every aspect of their financial lives.
The CA mark will identify an adviser who strives to be the project manager and pivot point for their clients’ total financial affairs, irrespective of the adviser’s technical background and qualifications. The mission of every CA is to make advice irresistible and lay the cornerstone for a new advice proposition.
