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:
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:
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