Financial advice: Only 80 independent financial advisers in Australia

Note: This article is updated regularly when new financial advisers join the independence club (latest update May 2016). A financial adviser does not have to be a member of the IFAAA to join the SuperGuide list, provided they can declare that they satisfy the requirements of being an independent adviser (we now have 3 categories). Anyone seeking an independent adviser needs to conduct their own research on whether an adviser is truly independent – this article will help you with this research.

One of the promising developments from the financial advice reforms is the proposal to establish a public register of financial advisers, including employee advisers, which consumers can access to check the adviser qualifications and whether the adviser is licensed. It appears the register will not disclose whether a financial adviser is ‘independent’.

Until the government or the financial advising industry creates a comprehensive list of financial advisers that consumers/investors can use to verify the professionalism of an adviser, his or her qualifications, the ownership of the advising firm and an adviser’s independence, I anticipate that SuperGuide will continue to publish this unique list of 80 independent advisers. We hope that many more independent advisers will come forward, or choose to move into the ‘independent’ category.

Does Australia really only have 80 independent advisers?

Before you ask the obvious question, let me say, we have asked the same question: How do we know that the 80 advisers in the SuperGuide list are the only independent financial advisers advisers in Australia?

Well, we don’t! We know anecdotally that there are plenty more independent advisers working away in adviserland. At least we’re hoping that in a country of 23.5 million people that there are many more independent financial advisers working away for their clients too busy to have time to register for this very exclusive list. Let’s hope SuperGuide’s updated publication of the ‘group of 80’ inspires other independent advisers to make themselves known (if they exist), or inspires others to become truly independent.

Open invitation to independent advisers

Background: Way back in February 2010, we published a list of 14 independent advisers which triggered much controversy and angst from the financial services industry, and from SuperGuide readers. In April 2011, SuperGuide was at it again, and the number of truly independent advisers in Australia had halved – to 7! In February 2012, for the third year in a row, we published an updated list of 9 truly independent advisers.

In June 2012, we again published the updated list of independent advisers but we split the types of independent advisers into 3 categories: more on those categories later in the article. As at May 2016, we now have 80 independent financial advisers on the SuperGuide list.

Since June 2012, we have slightly changed the process involved in compiling the SuperGuide list of independent advisers because we essentially have two definitions of independence:

  • The Corporations Act 2001 definition of ‘independence’ which allows advisers to charge asset-based fees
  • The IFAAA definition of independence, which excludes those advisers who charge asset-based fees.

We have also published an open invitation to all independent advisers to contact SuperGuide. We will add the names of the independent advisers to the SuperGuide list, subject to the adviser declaring they satisfy each limb of the independence requirements.

Note: The adviser will not need to be a member of the IFAAA to join the SuperGuide list (see end of article for link to invitation and for form to sign). The IFAAA has a stricter definition for independence than the independence definition contained in the Corporations Act. We have a second category for those advisers who satisfy the stricter IFAAA definition but choose not to be a member of IFAAA. We have also created a third category for those advisers who satisfy the Corporations Act definition of independence, which means they may also charge asset-based fees.

What does an IFAAA independent adviser look like?

According to Daniel Brammall, President of the Independent Financial Advisers Association of Australia Limited (IFAAA), the IFAAA receives quite a few calls from financial advisers seeking to be members of the association, and Brammall sends out plenty of application forms.

“In spite of all the conversations I have with advisers interested in joining, so far these members [17 advisers in the updated list below] are the only ones who have successfully passed the IFAAA’s Gold Standard of Independence test,” says Brammall.

According to Brammall, the three requirements for the IFAAA’s Gold Standard of Independence are:

  1. You can’t be affiliated with a bank, insurance or investment company (that is, a product manufacturer).
  2. You can’t receive commissions of any sort – including insurance commissions – unless you refund them in full to the client.
  3. You can’t charge asset-based fees (that is, a percentage of client assets under advice or under management).”

Independence remains an issue

Although the ban on commissions for future retail investment products (including managed investments, superannuation and margin loans) is history making (effective since July 2013), the question of independence (or lack of) remains an issue beyond July 2013.

In the past I have made the comment that I have found the debate surrounding commissions and ownership and independence of financial advice rather depressing because the Government and financial planning industry and commentators were trying to change the industry from the bottom – dragging the worst advisers (in terms of independence) to a level that was a little bit better than ‘worst’. I stated that such an approach was destined to countless setbacks (and ultimately failure) because the broader financial planning industry as it is historically structured is a product distribution model rather than a financial advisory model.

Real change to be driven by advising industry

Even so, real change will only occur when financial advisers drive the change rather than having the Government and regulator drag reluctant advisers kicking and screaming into a new professional business model. Initially, the leaders of the financial advising industry read the signs and were making the right noises (‘higher quality advice’ and ‘more professional industry’), although many backpedalled on significant reforms, in particular, the requirement to ensure a client periodically (every 2 years) agrees to remain a client (the opt-in rule) of the adviser. The original reform announcement referred to an opt-in after every 12 months, and then extended to every 2 years. Under the former ALP government, the final reform version for the opt-in requirement meant that some advisers won’t even have to participate in this compliance requirement, provided they are bound by a code of conduct approved by ASIC. And now we have a Liberal government that tried to remove the opt-in requirement completely, but was stymied by the Palmer United Party.

This irrational opposition from the broader financial services industry is disappointing for consumers and for younger people considering financial advising as a career. In my view, we need to reward the advisers who are operating in the best interests of clients right now – structurally, operationally and ethically.

The relatively new organisation – IFAAA – can differentiate the truly independent licensed advisers from the thousands of advisers who accept commissions and/or are employed or incentivised by the product distributors (typically the major financial organisations).

Note: Although financial reforms took effect from July 2013, existing commission arrangement and incentive schemes will continue to operate indefinitely, and independence, and conflicted advice, will be a constant struggle for the financial advising industry.

What does ‘independent adviser’ mean?

So, what do you need to possess in the way of skills and independence to make this exclusive list?

I interviewed Matthew Ross at the time we published the original list of 14 independent advisers (in February 2010), and his comments remain relevant. According to Matthew Ross, who is a member of the IFAAA, the list of independent advisers “satisfy the Corporation Act’s definition of independent (see s.923A) which is basically no commissions, no charging fees based on volume of product sold or advised on, and no affiliation with any product manufacturer.”

Ross explained that 80% of all authorised representatives are aligned with a product manufacturer, which precludes them from describing themselves as independent. He said: “Of the remaining 20%, a large slice of them pocket commissions (on insurance and/or investments) or charge their fees as a percentage of your assets, which is commissions by another name.”

Ross argued that the big push by planners to drop commissions but to charge fees as a percentage of assets under management is simply commissions by another name. Ross said that the asset fees are usually collected through a platform, which is not considered a ‘financial product’ under the legislation, and it means the financial adviser can then describe themselves as independent.

“The issue isn’t the word ‘commission’; it’s the concept of an incentive and no matter which way you look at it, when you are paid a % of anything, there is an incentive. Incentives result in zero independence,” said Ross.

Note: Effective since 1 July 2013, every financial adviser is subject to a statutory fiduciary duty to act in the best interests of a retail client. What this means is that a financial adviser is required to place the best interests of a client ahead of their own when providing personal advice to retail clients.

IFAAA – point of difference

The IFAAA promotes itself as the ‘gold standard’ of independence of financial advisers. Quoting directly from background IFAAA information:

Existing industry associations do not provide genuine independence. They represent the eighty-five per cent of financial planners associated with product manufacturers who receive commissions. According to the ASIC the typical financial planner acts as a “sales force for financial product manufacturers” and that advisers are “a product pipeline”. This is who the current industry associations are representing. Not one of the main four planner associations represents the interests of truly independent advisers whose interests are aligned with their clients.

According to the association’s background material, the IFAAA aims to solve the definition of independence and promote the value of independent advice to the consumers, to train and develop independent financial advisers, and to represent the interests of its members to government.

Membership of IFAAA

For a financial adviser to become a member of the IFAAA they must agree to the following:

  • I declare that I am genuinely independent and acknowledge the restrictions of the use of the term ‘independent’ under s 923A Corporations Act (2001).
  • I avoid all real and perceived conflicts between my interests and my client’s interests.
  • I do not receive commissions for my client purchasing a financial product.
  • I do not receive payment or inducements to recommend financial products to clients.
  • I do not have in place any fee structure that means I will not be paid unless my client purchases a financial product.
  • I declare that I have an interest in promoting and encouraging the professional development, independence and concerns of financial advisors.
  • I acknowledge that membership is contingent upon payment of an annual membership fee as determined by the Board from time to time.

Financial advisers are not the only experts who can provide independent advice. Accountants, lawyers and other independent professionals can become ‘associates’ of the IFAAA.

Group of 80 (26 + 41 + 13) – the list!

SuperGuide publishes, and intends to regularly update, a list of three categories of independent advisers:

  • those advisers (and AFSL holders) who are members of the IFAAA
  • those advisers (and AFSL holders) who satisfy the IFAAA independence requirements but are not members of the IFAAA
  • those advisers (and AFSL holders) who satisfy the independence requirements under the Corporations Act but may charge asset-based fees, which means they don’t satisfy the additional IFAAA requirement of only charging fees based on hourly rates or retainers. 

IFAAA members – independent advisers

According to the IFAAA, as at May 2016, there are 24 independent financial advisers in Australia who are also members of the IFAAA (satisfy the independence requirements under section 923A of the Corporations Act 2001, plus only charge hourly rates or retainers for services). The names of these independent advisers are:

ACT
Daniel BrammallBrocktons Independent Advisory
Susannah KulincevicBrocktons Independent Advisory
Phil ThompsonRise Financial
Tom BarlowRoskow Independent Advisory
NSW
Richard BarberLiquidity Independent Advisers
Stuart BarberLiquidity Independent Advisers
Fergus HardinghamFM Financial Solutions
Howard PittsArc Financial Solutions
Michael RadaljYour Private Advisers
Bill RaffleBennelong Private Wealth
Michael Rees-EvansLibertas Wealth Consulting
Ben SmytheSmythe Financial Management
QLD
Jason AtkinsRoskow Independent Advisory
Justin BrandBrand Financial
Neil SalkowRoskow Independent Advisory
VIC
Trent AlexanderFinancial Planning Expert
Adriano DonatoRoskow Independent Advisory
Rick HorvatHorvat Financial Advisors
Jason McGregorRoskow Independent Advisory
Matthew RossRoskow Independent Advisory
Jason SmithThink Independent
James StephanStephan Strategic
Joe StephanStephan Strategic
Graham StewartRoskow Independent Advisory
Chris ThomsSuper Focus
WA
Garry LongaMacroe Partners

Independent advisers who satisfy IFAAA membership rules, but are not members of IFAAA

As at May 2016, we have 41 advisers who have requested to be on our list of independent advisers, and who satisfy IFAAA member rules, but who are not members of the IFAAA (second category of independent adviser).

The advisers listed below have declared that they satisfy the three limbs of independence required under the section 923A of the Corporations Act 2001, and only charge hourly rates or retainers of services:

NSW
Gavin BeecroftQuantum Financial
Patrick BonifacioMy Independent Financial Adviser
Christopher Dorian BrowneF.D.Browne & Co
Ben LiddicoatBBK Financial Planning
Bill MackayQuantum Financial
Claire MackayQuantum Financial
Tim MackayQuantum Financial
Tarragon MannMy Independent Financial Adviser
Jaikrishna MenonMy Independent Financial Adviser
John ScottMy Independent Financial Adviser
Kevin SmithThe Professional Super Advisers
QLD
Stephen BlakeBlake & Co
Crystal BobirTupicoffs
Rocco CostaTupicoffs
Glenn HilberPrecision Wealth Management
Kearsten JamesTupicoffs
Neil KendallTupicoffs
Ma. Nympha LaoaganMy Independent Financial Adviser
Ross McConachieTupicoffs
Mark MilnerTupicoffs
Mark O’FlynnTupicoffs
Tony Sandercockwetalkmoney
SA
Samantha HarrisonWotherspoon Wealth
Oliver TemmeWotherspoon Wealth
Lorraine TylerWotherspoon Wealth
John WotherspoonWotherspoon Wealth
Simon WotherspoonWotherspoon Wealth
VIC
Jenny FarrellPriority1 Wealth Management Group
Daryl ForgeJDFA Wealth Advisers
Jennifer ForgeJDFA Wealth Advisers
Thomas HaMy Independent Financial Adviser
Melinda HedgesPriority1 Wealth Management Group
Mathew HorvatHorvat Financial Advisors
Rudolf HorvatHorvat Financial Advisors
Corin JackaPriority1 Wealth Management Group
Peter Morrison-DowdAspect FP
Stephen MurphyAdvice Services Australia
Matthew PerryLilliputian Financial Services
Mark TimsMy Independent Financial Adviser
WA
Dennis BartonAndep Investment Consultancy
Dijana CaneMy Independent Financial Adviser

Independent advisers who are not members of IFAAA, and may charge asset-based fees

As at May 2016, we have 13 advisers (9 from the one firm) who have requested to be on our list of independent advisers, and who are not members of the IFAAA, and who fall into the third category of independent adviser, that is, they charge asset-based fees.

The advisers listed below have declared that they satisfy the three limbs of independence required under the section 923A of the Corporations Act 2001 (refer earlier in the article):

NSW
Nigel BakerArch Capital
Jack TidswellExceptional Financial Planning
QLD
David LanePitcher Partners Wealth Management
Jeff LeminAspire Financial Consulting
Richard MeyersPitcher Partners Wealth Management
VIC
Simon BriggsPitcher Partners Investment Services
Sue DahnPitcher Partners Investment Services
Marcus DamenPitcher Partners Investment Services
Kellie DavidsonPitcher Partners Investment Services
Brendan FahyPitcher Partners Investment Services
David Gemmell50Plus Wealth
Victoria LindoresPitcher Partners Investment Services
Adam StanleyPitcher Partners Investment Services

If you believe that your name should be on one of the lists above, then why not contact SuperGuide? A starting point is to check out our open invitation, Still wanted: all independent advisers in Australia.

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Comments

  1. Independant. hmmmmm.
    I thought that was a naughty word in ASIC’s eyes.

    • Billy Norman says:

      It’s naughty to use the word, if you have not met certain conditions which are outlined in the Corporations Act.

      Hence for most advisers it is not lawful to use the word, but for the list in this article, if they have met the conditions, then they can use it!

  2. SMSFs are a financial product.

    A Financial Adviser recommending and/or coordinating the set up of a SMSF is manufacturing a financial product. If that Adviser then provides ongoing services in relation to the administration, taxation or investments of that financial product (or all of the above), then they have manufactured an in-house financial product, and their advice is conflicted. As the advice in relation to the in-house manufacturing of a financial product is conflicted, these Advisers are misleading consumers by peddling their wares under an “Independence label”.

    So, how is an Adviser recommending an “in-house SMSF” any different to another Adviser recommending an administration platform by their licensee? The only difference is the former receives an ongoing financial benefit, and the latter doesn’t…and which one is independent?

    Advertising “independence” in these circumstances is misleading to consumers, and a number of the self-identified independent Advisers are playing word games for their own financial gain.

    • So your solution?

      I would suggest that it would be that independence label be taken from adviser who helps with the ongoing management of SMSFs but I’m not sure that is realistic.

      The purpose of the independence label is to show that the adviser works for the client first and if they are the sort of adviser to no take insurance commissions, do not have a restricted product list based on which product manufacturer they are affiliated with and don’t charge volume based fees, I would say they have deserved the tag of independent.

      I understand that recommending an SMSF may provide ongoing benefits for an adviser but I also don’t think it is practical to be able to advise on SMSF without being able to offer this.

      • Hi TOS,

        The solution is simple, just ban the word “independent” within financial services, or amend the law to capture all conflicted situations which will have the same effect as a ban.

        Manipulating and confusing consumers via these tricky word games is highly unethical, and is more of a barometer of poor financial advice than an Adviser’s licensing regime. Many of the Advisers listed above know they are playing tricky word games, and they do so out of commercial interest rather than consumer interest.

        Every Adviser is conflicted in some manner (we all want consumers to use our services, and not our competitor’s services).

        Every Adviser has a “restricted” APL in some manner (as PI insurers do not provider cover if there are literally no constraints on the investment product universe).

        Every Adviser that takes no insurance commission or volume rebates that happens to work for an employer/licensee that manufactures administration platforms still cannot use the independence label – which defeats the purpose that you have defined for the label.

        Importantly, many of the Advisers on this list do manufacture product (using the SMSF example) and all of these then advise on the investments and/or administration of what they have set up (deriving a benefit from their ‘advice’).

        The law needs to be amended to capture these rogue Advisers hiding behind word games. If it is not ‘practical or realistic’ amend the law because it captures everyone, then perhaps this highlights that “independence” is a redundant concept.

        Instead of focusing on tricky word games to confuse consumers, the barometer of good quality advice should be measured through the prism of education, experience and the code of ethics that the Adviser subscribes to. Everything else is just marketing.

  3. Jordon Kwit says:

    Asset fees are incentives that prevent an adviser from being impartial and, therefore, create a conflict of interest between adviser and client. Only 64 independent financial advisers in Australia?

  4. Peter Barber says:

    I was wondering if there was a list of truly independent flat fee advisers out there and now I’ve found it.
    Excellent work Trish Power, hopefully the list of 65 keeps growing.

  5. Kathy helli says:

    I don’t see any

    advisors listed from Tasmania

  6. Dear Trish,

    There are a bunch of good reasons here and above. The main reason of the difficulty to find a consistent independent advice is because normally costumers prefer to pay revenue-based retribution to the advisory than a lump sum amount, whatever it happens to their investment.

    For this reason, it is important that the market become aware of the importance of internationalisation and specially in the labour market.

    According to Colin, who has previously commented in this article, the smoke and the mirrors have to stop. As a oligopoly used market, Australia has to become familiar with competitivity and accepting new agents into the market. Those agents will not only reduce prices within the market but also increase the quality of the services delivered.

    I would say that indeed independent advisors are needed but the real necessity is a customer based and focused advisory which helps the industry move onwards improving the customer service.

    Thanks for you article, best regards.

    Oscar

  7. Trish, one of the problems I see is that Financial Planners are afraid of disclosing their hourly rate based on the assumption that it will scare the punters. Most accountants, lawyers, architects and other qualified professionals are OK with disclosing their rate, along with an estimate of the final cost.

    Most of these professional have not only a higher education degree, but most have several years of study and experience to obtain professional qualifications.

    If I can have a first rate accountant for $300 an hour, with an annual cost for company and personal tax returns, and advice along the way for less than $2,000 per year why would a financial planner expect remuneration of 4 or 5 times that?

    There is sophisticated software that will, using the data from the punter, turn out a standard plan in a few minutes. Add in, say, 2 hours fact finding, another 2 hours for internal review of the plan, and another 2 hours for presentation. So lets say 6 hours at $300 = less than $2k.

    I’d happily pay $10k if there was real additional value, but not for a standard advice type of plan.

    The smoke and mirrors has to stop. If $300 an hour is not a reasonable rate then the industry really does have to reflect on how they think they are worth any more.

    The industry should move to a cost based fee structure and educate the punters that good advice is worth paying for.

    I would love to be able to bill at $200 an hour 🙂

    Rgds

    • Billy Norman says:

      Colin, the advice process is very time-consuming. Your assumptions underestimate how long it takes to go through fact finding, SOA production, presentation, and implementation of advice. There is no software that ‘churns out’ a plan in a few minutes. Even the most basic insurance advice SOA will take at least an hour or two for an experienced paraplanner to put together. Best interests duty and safe harbour provisions, together with guidelines for scoping of advice, have meant SOAs really need to be personalised for each client. Some time needs to be spent determining clients goals and objectives, and then scoping in and out different areas of advice. This needs to be reflected in the SOA – not an automated process.

      Fact finding can be very time consuming, going back and forth with the client to collect bits and pieces, super and insurance statements, ID etc. Then the CSO has to obtain third party authority to contact the client’s super/insurance companies, which they will take several days to process, contact them and sit on hold on the phone for long periods.

      Adviser then needs to actually determine the advice, go through alternative strategies, make meeting notes and file notes, working papers etc. More than an hour or two involved here, if they want to provide high quality advice.

      All this before the advice has been presented or implemented. (implementation is very time consuming as well)

      Hence….vast majority of clients happy to include asset-based fees and insurance commissions as a component of adviser remuneration. Clients with larger investment balances need to subsidise smaller clients, to an extent IMO. This is the same in many professions/industries.

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