My financial planning ‘experience’
Shortly after qualifying as a Chartered Accountant in the late 1990s and before I founded Tax Services Australia, I considered further qualifications and experiences to further my professional career.
I have always been enjoyed helping people with their taxation and financial affairs and had an interest in economics and investment. I had made investments in managed funds early in my career before moving onto shares, and property, and even took an early interest in the longest term investment that I would ever have, being my superannuation account. I have always been interested in sensible diversified investment, balanced between shares, property and optimising the use of the very tax effective superannuation environment.
I wondered whether I should try getting into the ‘financial planning’ industry as it seemed I could have more direct involvement in client financial affairs in an area of interest I enjoyed so much – investment. Being able to talk all day to clients about their investments in property, shares, managed funds, and building their retirement nest eggs seemed like it would be a lot of fun.
So I had a meeting with a Big Bank and we discussed a role they had for me as a financial planner.
It offered me everything I wanted, all the resources I needed to engage with a constant stream of clients, and an ability to help them manage their money and grow their wealth over a long period of time, with regular reviews with each client, updates to their financial plan being made as needed.
The income I could earn, seemed almost infinite. Potentially, new commissions on millions of dollars, each year.
So we came to discuss remuneration. My salary would be a modest flat salary, which was less than the income I was earning as an employee of a public practice accounting firm, but I would also be paid commissions.
I asked how the commissions worked.
Easy. If I recommended to a client to invest in a managed fund, I would be paid a percentage of that investment amount.
And if I recommended to a client to invest in a managed fund that was owned or affiliated with The Bank, then the commission would be double.
I asked “If I review the client’s situation and determine the best thing for their portfolio is to buy an investment property, how would I be paid?”
They said they would not pay any commission. My only income would be the modest annual salary.
The best interests of the client receiving the advice, was not relevant.
They intended to force me, like (I expect) all their other employed financial planners, to ‘recommend’ clients to avoid direct property and direct shares, and to invest in a narrow range of managed funds that (preferably) would pay the Bank, and me, the higher commission.
At this point, I thanked them and terminated our discussions, and went back to public practice as a Chartered Accountant. In 2001, I established Tax Services Australia and providing independent, professional advice and services to my clients, in my way.
And over the years, my clients have provided me their financial plans (Statements of Advice) for me to review, and I have seen too much shocking vested interest that have served the financial planners far more than the clients the ‘advice’ was intended for.
Clients needed financial advice for their financial future and sensibly sought advice from financial planners, which they expected to be professional and in their best interests. Instead of getting financial advice they could rely upon, they were sold ‘advice’ that unwittingly helped their ‘advisor’ more than it helped them.
In a professional career sometimes you need to make a decision to make less money and stick to your ethics. This has not happened in banking and financial planning, for decades, as shown in the current Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
I was lucky I did not change my path in the late 1990s and become a financial planner in a Big Bank. Life as a Chartered Accountant specialising in taxation and helping many hundreds of clients and preparing and lodging thousands of income tax returns since 1995 when I first entered the full time workforce in the profession, has provided me quality experience and knowledge to take care of my clients today.
I am lucky to have a wonderful group of clients. To you, I thank you, and I will always provide the service to you that you have come to rely upon.
To readers who have not yet joined me yet? Please, get in touch.
Tax Services Australia