Who hasn’t been shocked at what is currently being revealed through the current Banking Royal Commission? It certainly leaves a big question mark over the validity of the advice proffered by our big financial institutions.
And it would appear the cosseted environment, fostered by the banks for their advice arms, has conveniently kept the public gaze away, until now.
Recently I was reading an article about a new, scientific theory which endeavors to explain how extraterrestrial life could have evolved in the universe.
The theory radically differed from the accepted norms and has, therefore, garnered a great deal of attention from both inside and outside the scientific community. And, as per usual, with the postulating of any new concept, it also attracts a fair share of criticism.
And so it was no surprise to read the dissenting views from experts, vehemently attacking the new thinking with both scientific and philosophical argument.
Now, I know you’re probably thinking, so what, and why do we need to know any of this, especially on a finance blog? And you’re, right.
Any new theory explaining alien life formation is probably, the furthest from finance that you could get. But it wasn’t so much the new scientific theory that peaked my interest, but rather the vehement criticism it attracted.
Particularly as the authors were highly credentialed and intelligent people with long years in re- search and academia. But this didn’t stop some pretty harsh peer criticism, some of which was bordering on ridicule. Which seemed particularly odd considering the discipline of science is founded on new ideas formulated through robust thinking.
And so I couldn’t help but see the parallel within the world of financial advice. The entrenched doc- trines of the advice industry are also impervious to any new thinking or concepts.
Unfortunately, institutional involvement has guided the advice industry in a direction that has belayed the importance of individual customer needs. Rather favouring broad-brush solutions
which utilised a suite of in-house products.
And just like the scientific community, any alternative thinking also suffers the same levels of critical response and ridicule, to ensure the status quo remains. And why is that?
Well, the current Royal Commission into Banking has suddenly shone a much-needed light onto the major institutions. These are the ones, who have destroyed a rather simple service proposition, and turned it into a Frankenstein monster of fee income generation. And it became very apparent from witness testimony, that the huge rivers of revenue, must never be interrupted at any cost. Leaving customers a very long way back in the ‘care factor’ stakes.
So it seems that any Australian consumer seeking money advice is actually taking a huge risk when dealing with a large institution. And it has become quite clear that the whole financial advice
system appears to be totally broken with little chance of being fixed any time soon. Now I have certainly voiced my opinion on the industry in this blog on occasion click here. And also offered advice on how to select a financial planner and develop a productive relationship. Click here & here
But the entrenched disdain for clients seems to run very deep within these institutions leading to the development of some very peculiar client philosophies and corporate cultures as a result. And so I am at a loss as to the efficacy of my information in view of the Royal Commission revelations.
Unfortunately what’s been quite clearly established, is that the organisations who collectively de- liver approximately 85% of the financial advice in the country, are not only providing useless advice but are they are also wanting to ‘bleed’ their unsuspecting clients dry when they deliver it!
In view of this, the most effective strategy a prospective client can take is to increase their own personal knowledge of the financial planning process. Building an understanding of simple financial concepts and standard advice practices will put clients on a better footing with an adviser, and avoid much of the wool being pulled over their eyes.
Obviously, doing this would seem to negate the purpose of consulting with a professional, but unless you can develop your knowledge to an advanced level, a licensed planner is the only real option to get access to financial products.
( Start by reading some of the posts on this blog, I promise it will help.)
Thanks for reading and see you next time. Homepage
