The time has come for “legislative courage”.

The most recent financial advice scandal involving NAB’s financial advice arm, has again highlighted the impossibility of managing the compliant behaviour of a huge number of financial planners, spread over thousands of locations across Australia.

I am not anti-institution. Rather, I am against institutions trying to use professional advisers as their in-house sales force. The two do not fit culturally or philosophically.

Holistic financial planning is a profession which at its core, is based on extremely complex financial strategic advice and management, and fiduciary duty to clients. It has nothing to do with products or product sales. Instead, it has everything to do with providing clients with unbiased financial strategy advice, which may or may not incorporate investment advice and which may or may not include the use of financial products.

As I have highlighted previously, institutions do not want to be in the financial planning business. It expensive to manage all the compliance requirements involved with it. However, they recognise that financial planners are by far the biggest users of financial products in Australia and therefore offer a strategic sales funnel for their products.

The biggest issue preventing the Federal Government from effectively legislating for a licensing and regulatory system that provides Australian consumers with reliable, non-conflicted advice based on a fiduciary responsibility to the client is that 80% of all financial planners are employed by financial institutions.

Well, I argue that the time has come. The Federal Government has received clear messages from the Senate Select Committee, the David Murray-led Financial System Inquiry and the financial services professional body, the Financial Planning Association of Australia. These sources are uniform in their beliefs that the fundamental principles of professional practice must be adopted and are in the public’s best interest.

Major change must start now beginning with the separation of financial advice and sales. This would offer a clear definition to consumers of the distinct differences between both professions and suitability of advice to meet their needs.

The Federal Government needs to show some courage – listen, act and reject the self-interest lobby from institutions to protect what they believe is a captured sales force.

In the meantime, Australian consumers can be assured there is another way, through truly independent advice.

The information provided above is general information only and individuals should seek specialised advice from a qualified financial adviser. Please contact Hewison Private Wealth for more information.