As a financial adviser, I need to operate under the authority of an Australian Financial Services Licence (‘AFSL’). These licences are issued by ASIC. Holders of an AFSL are known as licensees.
Licensees and financial planners are divided into two camps. They can be aligned to a major organisation such as the Big Four Banks and organisations such as AMP. Or licensees and planners can be independent.
About 85% of Australia’s financial planners are aligned to and operate under the authority of one of these big banks or institutions. The obvious problem created for the client is that the AMP representative will recommend AMP products such as insurance or managed funds and the Westpac representative will recommend Westpac products. These recommendations may not be in the best interest of the client.
As a financial planner looking for an AFSL under which to operate, I went looking specifically for an AFSL that is ‘non-aligned’, an AFSL that is independent.
This means that my business and the advice I provide is not tied to any provider of financial products.
I did this because I wanted to be and will continue to be a genuine adviser. I receive no pressure from my licensee to sell a specific product or a specific amount of a product.
My AFSL allows us at Edge7 Financial to operate a practice where we are free to recommend anything that we truly believe is in our client’s best interests. Quite often, this involves not recommending a financial product at all.
This means at Edge7 Financial that we can be real advisers. We can look our clients in the eye and tell them honestly that the advice we have given them is what we would do if we were in their shoes.
‘What I would do if I were you’ is the only way to be a genuine adviser.
While it would be nice to have the marketing budget of one of these big organisations behind my firm, I would not have it any other way.
Dean Mico is an independent financial planner. Contact Us if you want professional financial advice in the best interest of your circumstances.
The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.