Adviser: Financial advising isn't a profession

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Shane Nicholas has been in the industry about 10-11 years. He has 110 clients and $75m FUM with RetireCare Personal Wealth Management.

But he isn't happy with how Australians view the financial planning industry.

“I’m not convinced people look at financial planners and think they’re professional,” said Nicholas.

He believes conflict of interest remuneration models and major public failings such as Storm Financial, gives people the idea that planners are just out to line their own pockets.

New regulations are beginning to change this view, he said, as the increasing cost of compliance is seeing more consolidation in the industry.

"Until the barriers between product manufacturer and advisers are broken down I don’t think we will be viewed as a profession."

Nicholas said the developments on industry reform have been the best things about the past 12 months and the industry needs to continue on this path to be recognised as a 'profession'.

He said his business doesn't require any adjustments following the regulatory changes, and although they have a competitive edge at the moment they will have to work hard to keep it.

If the financial services sector can lay low in the terms of bad media for the next few years, they should build enough consumer confidence to be established as a profession, said Nicholas.

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  • Darren W on 16/01/2013 2:21:14 PM

    Actually Simon, there are many back handers such a fully paid overseas conferneces, etc in the medical industry. They have no disclosure requirements and no limits on soft dollar benefits that I am aware of. Yet, the public still view them as professional. Perhaps it is to do with behaviours and ethics in their profession, rather the banning & regulation of these arrangements.

  • Craig HAWKINS on 16/01/2013 2:42:21 PM

    If you dont believe you are a professional in every sense of the word, then maybe you should find another industry to work in. Like charity, professionalism starts at home. There is enough negative conversation about what we do already circulating in the media, without someone going out of their way to give the rock-throwers a free kick at us. An awful lot of good quality professional planners do a heck of a lot of good every day and their clients intensely value their contributions to their lives . . . why are we wasting media space giving air time to someone with 110 clients and a jaundiced view of our industry ?

  • Alleycat on 16/01/2013 3:54:01 PM

    As a financial planner, I like many others find your both your comments and the "holier than thou" attitude both naive and self serving.
    Do you think the Accountant (CPA)who has been a client of mine for over 17 years that had a recent Trauma claim settled in 5 days from the day of lodgement and was paid $87,000 thinks because I earned $200 per year commission believes I'm unprofessional ?
    Both he and his wife who is also a CPA have been singing my praises to a number of clients and other accountants.
    I travelled 25 klms to complete the claim form, chased him after 3 weeks to complete the claim/medical forms and when I offered to drive and pick them up, he declined the offer and sent them to me by Express post, all for my $200 annual renewal commission.
    Before you start rubbishing the industry or profession, spend a bit more time in it and clear up that jaundiced view that you've irrationally developed.

  • Simon on 16/01/2013 10:04:45 PM

    Firstly Darren, fully aware of the medical profession torts and it always makes me cynical when talking to a doctor but at the end of their day they don't give 10-25% of their income to a licensee who also manufactures the drugs they prescribe. Alley at, not doubting the professionalism of 95% of our industry regardless of how they're paid. I refer only to the perception of our industry by outsiders.

  • CFP Administration on 16/01/2013 11:03:39 PM

    I am a little confused. Why does the article explain that our 'knight in shining armour' has 110 clients and $75m in FUM? Why is the FUM figure relevant, if our hero is not receiving asset based fees and / or ongoing commissions? Perhaps if we look at average FUM, it comes in at $682,000 per client. Perhaps superman's clients can afford to pay a 'fee for service' of say $2500 - $4000 pa? Me? I deal with real clients, with real issues (Mums and Dads on average incomes). Try asking for an annual fee for service, when most of my clients struggle to simply pay electricity bills. I am proud to stand up and say I am a professional. I am proud to say my clients are extremely satisfied with the level of service I provide. I am proud to say I charge asset based fees (averaging around $500 pa). I am proud to say I receive commissions from Insurance Providers to allow me to stay in business. Perhaps our superhero needs to crawl back under his 'Hall of Justice' rock with the other superfriends inflicting this disgraceful legislation on hard working, ethical Financial Planners. Open your eyes. Look at reality....

  • Alleycat on 17/01/2013 12:18:53 PM

    @ Simon, you raise a couple of important issues.
    Being professional isn't about what or how you charge but what you deliver to the client.
    This perception that receiving commission is unprofessional has been propogated by a number of self interested folks who had their own agenda to push, and that has been the mantra projected as the gospel to all and sundry.
    The over-riding consideration should have been for fairness to the client.
    Pauline Vamos (ASFA) once rightly said both Commission and fee for service are flawed concepts, when abused.
    Here is part of the problem.
    80.0% of the adviser profession is now controlled by a Bank, Fund Manager or Insurance Company and therein lies the greatest conflicts of all.
    If you have a look at most of the adviser APL's, a large proportion of the offerings are products owned/manufactured by the parent Licensee.
    Charging a fee for service doesn't make you professional, it just uses another form of payment, and anyone who thinks otherwise is delusionary.
    Being professional is putting the client in the best position possible within your scope of knowledge. That often comes as a result of a number of things but mainly education, research (know your product) and know your client, so you and the client can sleep well at night. Fundamental rules required by law.
    Sadly, many do not understand what that means.
    As far as conflicts/professionalism are concerned, it would have been much easier for there to be mandated scale of fees for each service, and how the client pays for it becomes irrelevent.
    The only thing that would dictate what happens next should be the quality of advice.

  • Craig HAWKINS on 17/01/2013 1:31:57 PM

    I'm 100 % with you 'CFP Administration' and the thoughts you have expressed. I would add one further point, in that it is generally considered UNprofessional to dump all over the industry / profession you work in, as our hero seems to have done quite freely in the article. True, he can now show the article to his 110 clients and use this as justification for his 'holier than thou' stance ( see, I told you all other financial planners were evil, arent't you lucky you are my client ! ), and I suppose it would make him feel more important and see his name in print. Quite frankly, if there is an image problem with the general public I would suggest that the kinds of 'advisers' our hero seems to suggest he is, with a handful of high net worth clients and far too much time on their hands, do more harm than good when it comes to promoting a constructive image for what we do. I do real work with real people every single day, and they have no issues with how I am paid or how much I am paid. They care about one thing, and one thing only . . . the advice I give and the service I provide and that they believe there is true value for money. It's about time this shameful debate grew up, and stopped being dominated by the noisy few who think their way is the only way.

  • Pat on 17/01/2013 2:35:35 PM

    I am sick of people suggesting that those who have worked hard and accumulate wealth are somehow not real. Or are you saying that our clients and the work we do for them is actually 'unreal'?

  • Matt on 17/01/2013 5:51:25 PM

    Well said "Nicholas". I'm agree with you 100%, but I need to respond to some of the others:

    @ADAM Have a read of the article again and you might notice that Shane said he's not happy about the view of the financial planning industry. Shane is in the "PROFESSION" he's not in "THE INDUSTRY". If you don't think that our "INDUSTRY" needs to improve then you must be a product pusher/FUM gatherer. Stop being so precious. Financial planning has a shocking reputation. We need to stop pumping up our own tyres saying we're doing a great job. Product providers DOMINATE the industry; 80% of advisers are working for or aligned to a product provider. It's an embarrassment.



  • Matt on 17/01/2013 6:08:36 PM

    "Nicholas" doesn't base his fees on FUM, they charge flat fees.

    The comment about FUM is the journo establishing that he's not small fry.

    You gotta laugh at the superhero and 'holier than thou' stance. That'll cause Shane to cry himself to sleep.

    Craig HAWKINS, you gotta be kidding me that you think it's advisers like Shane who are lifting the bar on standards who are doing our profession harm. You say you've got clients who adore you, then you must be a good adviser. So you must see how many bad advisers there are out there. We need to do more to weed them out.

    We've got to shut down % of FUM as a pricing structure. Until then we're an industry that isn't a profession. Is everyone aware that from 1/7/2015 accountants that are members of the CPA and CA aren't allowed to charge % of FUM? They're ahead of us...they're putting us to shame...

  • Craig HAWKINS on 18/01/2013 3:26:32 PM

    Actually Matt, I stand completely behind what I said, and fully believe that any 'adviser' who wants to publicly dump on our industry / profession is doing it harm, no matter how much you or he thinks he is trying to raise the bar ( and from the article, I fail to see how this is raising the bar in any form ).
    Yes, my clients value me, and the work I do extremely highly ( I didnt use the word 'adore', you did but thanks, its a nice compliment ) and you are 100 % correct, I see the effects of bad advise and bad advisers far too regularly. If you work out a genuine way to weed lousy advisers out, you have my full unqualified support ( I could suggest that we ask existing rules and regulations to be properly enforced, that would be a good start ). Until that eventuates, may i reinforce again that I dont care one iota what or how an adviser charges a client, my care revolves completely around how good the advice is. When that becomes the premise for future debate, we will all be better off.

  • Adam on 16/01/2013 12:35:02 PM

    You can't consider yourself a professional, if you don't believe you are working within a profession.

    Nicholas, your comments do nothing for our profession, and I am appalled by them. What was the point of this?

  • simon boylan on 16/01/2013 1:50:49 PM

    Nicholas, you hit the nail right on the head when you say we will not be viewed as a profession until advice and product are seperated. This has to mean that advice firnms are not owned by product and platform manufacturers. Ufortunately this is not something we are likely to see in our lifetimes!
    And Adam, believing, saying and acting like a professional, do not unfortunately make you part of a profession. It is public perception that does that. Imagine if 95% of doctors and pharmacists were employed by or in partnership with drug companies? How much trust would you place in their prescriptions?

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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