Let's separate product from advice
Imagine a world where people view financial advisers the same way they view doctors. OK, there are bad apples in the medical profession as there are in all walks of life. But, generally speaking, you can be reasonably sure, when you visit a doctor, that:
— they have studied medicine to a high level;
— they will tell you what you need to hear, not what you want to hear;
— they have read the latest evidence on medical intervention;
— they will not receive financial kickbacks for any medication they prescribe; and, most important of all,
— they will act in your best interests at all times.
David Haintz has featured on this blog several times before. David was a major contributor to making Shadforth Financial Group one of the most successful, and most trusted, financial planning firms in Australia. He now runs a consultancy called Global Adviser Alpha. David’s latest blog post, Doctors prescribe medicine, they don’t sell it, is essential reading for financial advisers everywhere.
In the article, David explains how, historically, products and financial advice became inextricably linked. Even when the advice was good advice, it was effectively paid for by commissions paid by product providers.
But times are changing. Gradually, across the world, commissions are being banned, and the pressure is growing on advisers to give genuinely independent advice. As David puts it, clients want to know that the adviser is sitting on their side of the table.
As David Haintz says, it is high time that we separated product from advice altogether:
“We need to educate stakeholders that the real value of financial planning is ‘above the line’. We need to take our industry from product to people and from money to meaning.”
Hear, hear.
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