End of year time for us Accountants and Financial Planners can be a real handful at times. No matter how many times we tell clients they always leave planning to the last minute.

When you are sitting down in front of a client with hundreds of thousands of dollars of taxable income that they need to get rid of with a few days before June 30th it is really easy to see why so many advisers take the easy way out and place their clients funds into Agri investments! In the office we are not taking that option and instead looking at more complex multi product strategies with a range of capital protected products that are based on equities.

Ongoing service fees

There is a lot of talk in the Industry about "defining your service proposition" to help justify the fact advisers receive trailing commissions. Many of these ongoing service offerings include things like e-mail newsletters, free seminars and annual meetings to discuss the economic environment.

I think that education is very important for clients so that they better understand what is happening with their money however how do you cost these services? Clients of my Accounting practice get newsletters, daily updates on our website, you tube videos and free seminars all for free and all without me charging them a monthly fee. Now i could charge them a monthly fee, some would accept and some wouldn't and there is not doubt this would make my business more profitable but my question is why would I charge my clients for this service?

Sure there is a cost but I believe it is part of my Marketting and Client retention strategy as much as it is a "service" for clients. Now I could easily be missing the point here as I am new to Financial Planning but it just strikes me as odd?

What do you think? What ongoing service(s) do you expect from your financial adviser and what would you pay for them?

More lunacy from the FP industry

I recently became privy to an arrangement between a dealer group and a service provider that sent shivers down my spine, now this may be an isolated instance of this sort of behaviour but i think it says something about the state of our industry and really shows why the government wants to outlaw commisions and overrides. The scam/legitimate business arrangement works like this;

The product provider normally charges lets say $100 per for a product/service and presumably margins are quite tight so there is little or no slack available to pay referal fees/commisions through to advisers and the dealer group in question so to make it worth while the product provider has created an alternative price schedule especially for clients of the dealer group in question so instead of paying $100 the client pays lets say $150. The dealer group and the adviser then split the $50 premium between them! (the actual figures involved have been changed and i have deliberately not identified the providers in question)

Now I do understand that in some instances paying a referall fee may a legitimate product distribution method but i think the deliberate over inflation of the normal costs of the product is a form of misleading and deceptive conduct and advisers should be forced to inform their clients that they are paying over standard rates for the service/product in question. What do you think? It truly stuns me that arrangements like this even exist!

Is there such a thing as ethical financial advice?

I have started this Blog to explore the ethical issues within the Australian Financial Advice industry and my Practice. I am a public accountant and recently decided to add financial advice to our business as our clients definetly need financial advice.

Now one year on and I have realised I take my fiduciary duty to my clients seriously and cannot have any conflict of interest perceived or real in my business. So begins my journey to build an ethical advice business.