Managed accounts and FASEABY SIMON CARRODUS | THURSDAY, 30 JUL 2020 5:13PM I've always enjoyed irony, so the irony wasn't lost on me when I first read Standard 3 of the FASEA Code of Ethics (Standard 3). It's ironic because Standard 3 purported ... Upgrade your subscription to access this article
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After 38 years in advice I believe most advisers shouldn't offer investment advice, nor charging fees for doing so. Competency is thin on the ground or non-existent. Most can explain the rules around tax, superannuation (a subset of tax) and how to deal with the various life and financial changes in generic terms - valuable in itself and can be almost guaranteed to be sound, if an adviser is competent and well-informed. Their role then becomes one of guidance and mentoring to ensure correct and timely steps are taken so clients achieve optimal pathways. As to investing - advisers know little (often less) than their clients. Everyone is guessing, but no one is saying so.
Conflicts of interest occur when one pretends to know more than one does - especially when investment advice is required to attract fees. We break our fees down, and offer investment advice as only a small portion of our service and allow clients to do their own transactions - follow their own path, with guidance from us on a 'best efforts' basis.
We tell them no one knows what tomorrow will bring, so we show them how best to avoid risks and let them follow their own, now better informed instincts We have the lowest PI premium in the country and have never had a complaint to deal with in our 38 years - other than by one fund manager/banker who didn't like us telling the truth about them...and they withdrew after a small " we said XYZ were bastards and we're sorry we did, but they are" apology.
Are other advisers out there also less concentrated on investment advice and more on mentoring and explainations of markets and risks, as we are? After being fee-for-service for 30 years we don't just manage but actually eliminate every potential conflict of interest, including that one of 'knowing best'. eg, we use Netwealth products because they allow/encourage clients to do transactions (as do we) and we charge less for clients who do so, as it reduces our risks of advice.