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How did the Royal Commission into the Financial Services Sector effect my Financial Planner?

Unless you were sleeping under a rock and haven’t read any of the previous chapters of the Walker Capital eBook into Financial Planning, you would have heard about the into Misconduct in the Banking, Superannuation and Financial Services Sector.

The findings were damning, and the whole sector has gone through an overhaul to regain the trust of their customers – including in some cases paying back large sums of fees and fines that were changed indiscriminately and unlawfully.

According to KPMG, “this report will drive significant transformation in financial institutions including operating models, product design, customer interaction, governance, remuneration and risk management. Businesses impacted include banks, mortgage brokers, wealth managers, insurers, superannuation funds and financial advisors.

The Commission’s work has four clear observations:

  • the connection between conduct and reward
  • the asymmetry of power and information between financial services entities and their customers
  • the effect of conflicts between duty and interest
  • holding entities to account.”[1]

As a client of financial planning (financial service), you could be excused for wondering “How this may directly affect you?”.

For a specific review, the Australian Treasury released a table with the recommendations of the Royal Commission, and the effective response they issued to move forward – Restoring Trust in Australia’s Financial System.

In summary, though the Royal Commission provided the following changes to your financial planner, the Commissioner’s recommendations, while expected, bring significant disruption to and accelerate necessary changes to business models, specifically:

  • Removing grandfathered conflicted remuneration
  • The suggestion that life insurance commissions be reduced to zero
  • Requiring annual consent to fees.
  • Higher training requirements
  • New reporting obligations and controls
  • A significant uplift in internal compliance.
  • A new disciplinary body to bring financial advisers into line with other professions. 
  • Compulsory training and a new Code of Ethics
  • Reporting compliance concerns.
  • Organisations will have a responsibility to ensure rigorous recruitment and reference-checking processes for advisers seeking to operate under their licence.[2]

These ten points are only the beginning of the changes in compliance, reporting, regulation, fee structures and services that directly affect your financial planners, the organisations they work for and the services they provide. As such, it provides you as a consumer of financial service far more clarity, more convenience and more safeguards to know that you are protected – as you should be.

As we have mentioned earlier, it is important to do your due diligence into your financial planner – or any professional services provider for that matter.

To get a feel for potential planners, review their website, ask for phone numbers of several clients to discuss their ongoing experience and get a feeling for whether the planner is a good fit. In addition, have your lawyer and accountant investigate your new adviser – just to get a feeling about them.

This is no different to an interview process that you may go through to get employment, and your financial planner is no different – they are being interviewed for a long-term position within your network of consultants.

Finally, you need to do some reading, get an understanding of what they need to provide, how they need to provide it and what they need to provide to you. The governments Restoring Trust in Australia’s Financial System is a great place to start, as are the FPA and AFA websites.

[1] https://home.kpmg/au/en/home/insights/2019/02/financial-services-royal-commission.html

[2] https://www.ey.com/en_au/financial-services/how-the-royal-commission-impacts-the-financial-services-industry

Related blog articles

Financial Planning Brisbane

Oct 14, 2021 10:24:16 AM

A Brisbane financial planner can help get your affairs in order for your business and personal needs.

As people from the southern states flock to the beautiful Sunshine State, the people of Brisbane need to ensure their assets are protected and in the best place to capitalise on the market growth.

From skyrocketing property prices, through to real estate investment trusts (REIT) geared to capitalise on the current growth, are your personal finances to maximise your returns in your retirement?

Financial planning is your roadmap to success

Ever wondered why some people are retiring comfortably up on the Sunshine Coast, Fraser Coast or Gold Coast beaches? Financial planning has more than likely quite a lot to do with it.

Seeking professional financial planning advice sooner rather than later can literally save you tens of thousands, if not hundreds of thousands during your retirement, not to mention providing more money to enjoy now – fun in the Brisbane sun!

Why see a professional planner now? Why not when I am closer to retirement?

It is a myth that a financial planner is something that you need when you are coming up to retirement. In fact, a Brisbane financial planner can provide you with the necessary advice, roadmap and goal setting that could open your eyes to so much more.

Thinking of an investment property? Maybe an annual holiday overseas with the family? What about a jet ski to punch over to Straddie? Well, rather than buying these on credit, or leveraging assets just because your bank manager says it’s a good idea, why not have an expert take a look?

A financial planner looks not only at the now, but the future, and everything in between. You wouldn’t get in the car without knowing where you were going, and your financial map is no different. Like your GPS, a financial planner in Brisbane can provide you with several ways to get to your destination, different risk levels, varying investment options, not to mention regular passive income streams to top up your annual salary!

Wouldn’t it be nice to have an extra $1000, $10,000, or even $50,000 a year? A financial planner can show you how.

But don’t be fooled, a financial planner will also give you the hard truth about your financial situation, your credit score, your debt levels, and your retirement plans.

How does a financial planner work?

The great thing about most financial planners around Brisbane, is they come to you. They meet and discuss your personal finances. This includes insurance, superannuation, investments, mortgages, credit cards & debt levels, wills & estate planning just to name a few areas.

They will also work through your earning capacity, your life situation (married, children, single etc), the number of years you have left to realistically work in your job at full capacity – and then build out that roadmap, just for you.

Then on a regular basis, your financial planner can come to your Brisbane home, or one of the great cafés around the River City, and discuss your progress, make changes if necessary but all in line with meeting the goals and expectations you set out in your initial meeting.

Financial planning is not just for wealthy people, it is a profession that aims to create wealth for its clients. Not simply financial wealth, but the wealth of the shared experiences that you and your family can enjoy but knowing your (and your family) financial future is in safe hands.

Financial Planning Perth

Oct 14, 2021 10:17:51 AM

Want to find a financial planner in Perth to get your finances in order? Ask us for an appointment.

As the most isolated capital city in the world, Perth residents have long enjoyed the fruits of the mining boom, the picturesque beaches and a lifestyle that is arguably the envy of much of Australia. However, Perth has also experienced the economic highs, and desperate lows due to its reliance on what it pulls out of the ground, with fluctuating house prices, cost of living, not to mention job securing often tied to Global Iron Ore and other precious mineral pricing.

In the 2017 ABC Documentary, Betting on the House, it was evident to viewers how unguided, inexperienced investment in the property market brought many people in WA to their knees.

With similar market hallmarks in the Western Australian’s mining industry – in part due to the trade war with China and the downward pressure on iron ore pricing & jobs – it’s timely to consider could a GFC-like effect impact the WA market?

Prepare for the unexpected

Financial Planners in Perth understand the risks of FIFO workers, the rewards and the opportunities that are out there for investors that put their money in the right place.

A financial planner can provide a path to success for your personal finances, regardless of if you earn a lot now, later or lose your job through industry cutbacks.

In a market such as Perth that has already seen the highs and lows, pooling your investments in one asset class such as shares or property has proved to be extremely dangerous – and for your long-term financial security, a Perth financial planner is key to getting this right for you.

Regardless of how old you are, have you got a will? Have your thought about how much you would need to retire? Have you through about purchasing a boat? Or have you seen a little apartment you liked in Broome that would be a great holiday rental, as well as a place for you to get away from the world? A financial planner based in Perth is the ideal piece of the puzzle for those looking to ensure their financial future is in good hands.

I understand money, why should I see a financial planner?

What happens if the mining ends? If you work in hospitality or tourism and run into issues, could you survive if it couldn’t get back up on its feet? What if you lost your job? Could you pay your mortgage?

A financial planner is not a ‘dooms-day prepper’, but a planner for all scenarios you might face in your future. They look at your life, objectively, working through what levels of debt you have, what income you make, how many years you could work and how much you need to retire.

But it’s not all about squirrelling away all your money and having no fun. What about a small boat to enjoy Rottnest Island? Why not. But too many people make the mistake of putting them on credit, not planning, saving and buying when the time is right.

If you want to be comfortable in retirement, get debt-free, and own your financial future – not be a slave to the big banks and their interest payments – then a financial planner in Perth is your next best step.

The Next Steps…

Jul 30, 2021 10:47:17 AM

The Next Steps…

Weigh the situation, then move – Sun Tzu

Your financial journey is now in your hands. This Walker Capital eBook has provided you with the details of the product, price, place, people and processes of financial planning – now it’s up to you to make it happen.

The next steps are to look inwards, review your current financial situation, download an excel spreadsheet template of a personal budget – if you don’t already have one – and start getting prepared to meet with a financial planner.

Speak to your friends, accountant, lawyer and see if there are any names that come up more than once. The key is don’t just to run to the biggest name in town, they will often have a standardised offering, non-flexible pricing and mediocre returns.

There are many financial planners out there, but the key is to find the one best suited to you, your family and your financial needs and risk tolerance – remember, you are the client, it is your call.

Walker Capital are an established financial investment, fund manager and financial services company based all around Australia.

With a dedicated financial planning network expanding exponentially, Walker Capital have independent advisors, with objective thinking. Being part of a national network means Walker Capital get access to the best investment opportunities across a wide range of classes.

Being a vertically integrated business there are internal & external opportunities that are available to clients, while also never creating a fund or a product without themselves investing or using it – a mark of faith in a product if there ever was one.

Your financial journey should be that of a learning, growing and rewarding experience, pick the financial planner who shares your vision, understands your goals and objectives and, most importantly, understands you.

Congratulations today is your day, your off to great places your off on your way – Dr. Seuss