The most glaring observation was that 73% of respondents regarded an adviser’s status as being genuinely independent as being very important. In addition, 84% of respondents said they would be more likely to engage in a long-term relationship with a financial adviser if they were genuinely independent. 

It is obvious from the survey that demand for advice is strong, however, those seeking advice want to be sure that the advice they are getting is free from conflict and ultimately in their best interest.   

But what is Independent Advice? 

Under Section 923A of the Corporations Act, financial service providers cannot use the terms ‘independent’, ‘impartial’, and ‘unbiased’ unless:  

• the person (including anyone providing a financial service on their behalf or anyone on whose behalf they are providing a financial service) does not receive: 
• commissions (apart from commissions that are rebated in full); 
• forms of remuneration calculated on the basis of the volume of business placed by the person with an issuer of a financial product; or 
• other gifts or benefits from product issuers which may reasonably be expected to influence that person; 
• the person operates free from direct or indirect restrictions relating to the financial products in respect of which they provide financial services; and 
• the person is free from conflicts of interest that might arise from any relationships with product issuers and which might reasonably be expected to influence the person. 

If an adviser does not satisfy the above, then they cannot be regarded as truly independent. This restriction also extends to the use of the term ‘Independently Owned’. 

At Hewison Private Wealth we are strongly in favour of the above as it ensures that consumers are not misled into believing that an adviser is independent and free from influence when that is not the case.  

A drive for administrative efficiencies and vertical integration has seen many advisers establish their own internally managed investment solutions i.e. Separately Managed Accounts. Although there are varying business models within the industry and the model selected by an adviser is their prerogative, the question remains, is this independent advice? Not according to the law. 

Further, an adviser charging a fee for service whilst also receiving an insurance commission for insurance advice cannot be regarded as independent.  

To truly be regarded as a profession and provide the consumer confidence that we are acting in their best interest I cannot see any other way than continuing with adherence to the current regulation.