THE Independent Edge
Independent financials advisers are a rare breed. Craig is one of less than 100 advisers nationwide to be granted associate membership of the Profession of Independent Financial Advisers (PIFA).
PIFA is the peak financial planning professional body as it only grants membership to those that meet the strict standards required to be classed as independent. It is a rare honour to be accepted.
Members must meet the following criteria:
Must only act in the best interests of clients.
Have no connection to any product providers.
Receive no commissions at all (or are rebated in full back to the client).
Do not change percentage-based advice fees (must be flat dollar).
Must not operate under a Approved Product List (these are used by licensees to push advisers to use certain products).
All other financial advisers within their licensee must also meet the above conditions.
The key benefits of working with a true independent adviser:
There is no question that commissions bias advice. Fortunately, the government banned commission on investments and super. While commissions can still be legally received on insurance recommendations, independent advisers refuse to accept them as they create a conflict of interest that can result in poor products being recommended and unwarranted amounts of insurance being recommended. Working will an independent means you can be sure you only get the insurance you need and it is typically up to 25% cheaper.
No percentage based advice fees
Percentage based advice fees are commissions by another name. They encourage advisers to only recommend strategies or products where they can charge an advice fee. Independent advisers won't push you into a certain product for their only benefit meaning you will get advice sorely in your best interest. This can mean a better strategy or a better investment with lower product fees.
Owned by or licensed through a product provider
It is obvious that if you are employed directly by a product provider, there will at least be some invisible pressure to recommend the product issued by your employer. When you work with an independent adviser, you can have confidence that you'll get recommended a product that only benefits you.
No Approved Product List
Approved Product Lists often are discussed as a positive by advisers that use them. They'll say that they only recommended products that have been researched, assessed and approved by their licensee. In part this is true but it is not the full truth. An Approved Product List is mostly used by licensees to manage their risk and encourage advisers to only recommend products from that list. It makes it easier for licensees to oversee their advisers. Most advisers that don't even have any connections to product providers are forced to operate under them. It should really be called a Restricted Product List as it doesn't encourage adviser to search for and recommend better products.