Unfortunately financial advice has again been in the press, thanks to the issues experienced at Commonwealth Bank (CBA). This has, justifiably, shone a light on the advice industry and conduct of the advisers working within it. The issues at CBA mostly stem from some advisers putting their own interests above those of the clients they were there to serve. Where financial advisers are rewarded financially to sell a particular product, their interests are unlikely to be aligned to that of the client. In the most publicised of cases, advisers were incentivised through higher commissions to sell riskier products than would otherwise be suitable for particular clients.

While it is easy to blame a few rogue advisers, the real issue here is that financial product sales have become confused with financial advice. It is a fact that roughly 85% of Australia’s adviser population are either directly employed by or aligned to one of the large financial institutions (the big 4 banks, AMP & IOOF). As a result, a large number of Australian advisers are encouraged to recommend certain products.

Future of Financial Advice

The recent introduction of the Future of Financial Advice (FOFA) was meant to address this behaviour. Introduction of laws forcing advisers to act in a client’s interests ahead of their own or those of their employer and the banning of commissions on certain financial products are a step in the right direction. However, where advisers are employed either directly or indirectly by a large bank, this inherent conflict of interest will always persist. While it is too early to evaluate the success of these reforms in eliminating or reducing rogue advisers behaviour (the CBA issues occurred prior), the industry is hopeful of success.

Our clients’ success is our success

It is these types of conflicts that were the main driver behind the launch of Elston Partners almost 6 years ago, and they continue to be a major influence on our business today. We clearly understand that our clients and their success is the single most important factor in our success. We have our own financial services licence, so we can focus on finding solutions to best fit our clients’ needs, rather than being pressured to meet the needs of a big “parent”.

We encourage a culture where all staff understand and recognise that our clients entrust their financial future to us, and the deep responsibility that comes with this. We will not tolerate anyone in our business that puts their own interests ahead of the clients that they are there to service.

Ultimately, Elston Partners would not exist without loyal clients who are willing to refer their family and friends or our valued professional partners who put their trust in us to improve their clients’ lives. We don’t have a huge suite of products that requires a legion of salespeople to sell. All we have to “sell” is our advice and expertise, and the improved outcomes that it delivers for people.

While the CBA situation is a tragedy for those involved, we hope that our clients understand the differences involved in dealing with a professional advice business and feel comfortable in the fact that we have their best interests at heart.