I found myself bewildered and a tad frustrated recently when I read an article in the financial press that implied AMP was “leading the way” with goal based advice, otherwise known as objective based advice. Similar headlines appeared when AMP introduced a fee based model.

Admittedly it is a reality that the large institutions control a high percentage of the financial planning market however instead of misleading the public that AMP is leading the way, perhaps the headline should have read something like – “Finally! AMP wakes up to goals based advice”.

It’s the unfortunate truth that most large institutions can’t afford to be flexible. Their compliance departments require generic risk profiles to be completed, which place the client into a portfolio category with little consideration as to their personal goals. To further robotise the process, each “model portfolio” will likely consist of managed funds where responsibility and management is outsourced to an external, faceless fund manager. Oh, I should probably mention that these funds will likely be institutionally branded for them to ‘clip the ticket’ of the client once again. 

In contrast, many self-licenced financial planning practices have operated a goals based advice model for many years. Hewison Private Wealth certainly has, for the last 30 years!

So what exactly is goals based, independent advice? Goals based advice involves a qualified adviser meeting with an individual client to gain an intimate understanding of what is truly important to them and what it is they are looking to achieve in the short, medium and long term. And it is not just determining how much they may need in super at age 65, it involves drilling right down into the individual’s vision for their future. For example, if travel is important, where exactly do they want to go? What hotel do they want to stay in? Which restaurant do they want to eat at?

Hewisons’ successful business model is based on developing long term personal relationships with our clients. Understanding what really fuels them is much more powerful than asking them to fill out a risk questionnaire to determine which generic investment portfolio they will receive, regardless of whether it’s going to get them to their favourite restaurant in Paris.

Implementing a goals based approach forms the cornerstone for the advice process to flow from. It allows us to formulate a unique asset allocation and direct investment mix that is going to meet the client’s goals. After all, that is what they are paying for. It certainly makes fiduciary duty a no brainer, doesn’t it?

As an independent self-licenced practice we must do whatever we can to assist in educating people to enter into their financial planning relationship with their eyes wide open.

Please note: The information provided above is general information only and individuals should seek specialised advice from a qualified financial adviser. Please contact Hewison Private Wealth for more information.