Financial advisers have a simple obligation: to provide advice that is in their client’s best interests. Happily, history shows that the best way for an adviser to do well is to help their clients do well. As it happens, prioritising a client’s best interests is in an adviser’s best interests as well. What’s more, as the world of financial planning moves increasingly and inexorably towards a fee-for-service model, the link between a client’s best interests and their advisers best interests will become even more important.
And, of course, if you look after your client, you keep the regulators happy as well. That’s why the best interests of a client, an adviser and ASIC are all inter-twined.
Making these happy links happen
To truly provide advice in the best interests of their client, an adviser must be free to consider every aspect of their client’s financial presentation. This means that the adviser must be free to consider elements of financial planning such as:
- homeownership (residential property in Australia’s largest asset class, and very few, if any, Australians achieve financial freedom without owning their own home);
- all things to do with owning a home, such as renovations, upsizing, downsizing, etc;
- investment property;
- debt management;
- taxation planning;
- career management, including study or vocational training;
- small business planning;
- relationship issues (marriages, divorces, etc);
- financial assistance to other people, such as adult children or elderly relatives; and
- aged care.
As you can see, this list extends well beyond the traditional life insurance and superannuation that many advisers restrict themselves to – or are restricted to, if their AFSL is owned by an institution that provides one or both of these types of product. For example, it is common for institutionally-authorised financial ‘advisers’ to have never recommended a property investment. Reidential property has been Australia’s best-performed form of investment for the last 20 years – and yet many clients never hear about this from ‘their ‘ adviser.
Here at Dover, we put products in their place. We see the above list as the starting point for quality financial advice. These are the areas that make a real difference to people’s financial well-being. We encourage advisers to address these issues in every client interaction. In many cases, our advisers prepare complete SOAs that address every important area of a client presentation without recommending a single product.
Of course, in many cases, our advisers do recommend financial products. But they only do this if the product represents the best solution to their client’s problem. That is the hallmark of Dover’s model: products, and the institutions that supply them, must always serve the best interests of the client. We keep institutions in their rightful place – in the picture, but only used on the client’s terms.