The Royal Commission(RC) put out into the Public arena what we in the industry have been aware of for a long time. That the big banks and insurance companies had been having a field day from; -“earning” fees from accounts they didn’t service or were dormant
- providing conflicted advice because the “advice” was always to buy their own bank or insurance company products
- or providing advice that was not in the best interests of the client, but the business or the individual’s own monetary interests
- receiving grandfathered trails from products sold years ago
- charging fees on a FUM basis which is really just a commission in another way unless a service is being provided
- and just providing bad or inappropriate advice.
I am proud to say that Balanced Investment Strategies does not do any of the above, and that for us, the RC was welcome as it gives our business a chance to stand out from the majority of the companies out there supposedly providing Financial Planning (FP) Services.
We are, together with Cosgrove and Co, a Financial Services firm providing all of the financial services that a client is confronted with in their personal and business lives.
Separately, Balanced Investment Strategies holds its own Australian Financial Services Licence(AFSL) and has done so since 2008. We cant, by ASIC rules, call ourselves “Independent” but, for all intents and purposes we are! We own our business 100% and therefore are free to provide the advice and products that are in the best interests of our client.
We are not “vertically integrated”, meaning we do not own any financial products, so can’t be seen as advising clients to buy our own products. The platforms we recommend to clients, and the managed funds within those, are selected mainly because they provide the Asset Allocation the client needs, as well as their comparative low cost.
Happily we therefore have no conflicts of interest to resolve and that gives and will give us a major point of difference to other FP firms now and in the future.
We charge our clients “Fees for Service”, meaning we quote and agree with the clients upfront the Fee that we will charge them after describing the Services that we will provide over time, involving the Advice and Implementation of same. Similarly a Review Fee is charged each year based on what services will be provided in the review, NOT on the amount of funds that the client has invested and we are managing for them.
We often provide Advice without recommending investments, so our Fee for Service and ongoing Review Fee will survive even if Funds under management (FUM) fees were banned.
We abide by the FOFA rules of providing our clients with Fee Disclosure Statements (FDS) that set out what Fees have been charged and the Services that have been provided for those fees.
Being ahead of the game in the way we charge our clients, we don’t have to make any adjustments to what we are doing in this area.
With our own AFSL giving us the all the licencing we need to advise and administer our SMSFs, we are well placed to grow this business both in the Administration for, and Advice and Strategies to, Trustees. As you know, we are actively looking to acquire more Funds in this space either by absorption or purchasing, to grow the number of funds under advice and administration.
Overall, our takeaway from the RC is that we are well placed to actually Grow our business as a result of its findings.