The Banking and Banking Commission is in full swing, and its new focus is to separate recommendations from financial product companies.
People are really worried about the seemingly endless situation. Banks recommend their products and call them “financial advice”, but they make bad suggestions.
Alan Fells, former chairman of the Australian Competition Commission, recently discussed this issue. He said: “There is only a deeper conflict between developing financial products and then providing independent financial advisor or so-called freedom and justice.”
But will eliminate vertical integration lead to independent negotiation?
Before I think this proposal is “free”, I think the following three requirements should be met.
No property or association
Many consultants in Australia have their own business, but they are all licensed by banks or company-owned companies that develop financial products (such as insurance, mortgages, premium investments, or investments).
The licensees can ultimately influence the advice provided by their advisors in a variety of ways, including limiting access to working out and restricting the list of yields that consultants can provide advice.
80 consultants work in financial consulting companies in Australia, and these financial consulting companies are associated with or associated with financial institutions that produce financial products.
The company encourages unrelated consultants to recommend their financial products. The most effective incentive is to pay a commission based on your debt level or insurance costs.
When debt increases or insurance costs increase, if your advice is paid more, your interests will directly conflict with this economic motivation.
Commissions can suggest loans or insurance that you don’t need. This suggestion may cost you tens of thousands of dollars. Or, taking the Melbourne nurse as an example, her emotional experience was recently listed in the Royal Commission (Family House).
Product manufacturers also provide huge bonuses to consulting companies that are exposed to certain “sold” products. Rewards of this size usually end up setting individual rewards for your financial advisor. They can influence their suggestions.
In Australia, more than 99% of financial advisors can accept bonuses and gifts of the same size as commissions or other benefits.
No asset fees
The permanent consulting fee based on your investment balance is an asset-based fee. The percentage of fees is usually arbitrary and is not based on the recommendations, services, or prices provided.
What’s more worrying is that asset-based fees may distort, for example, investment advice, rather than reduce debt, thus negatively impacting the advisor’s impartiality-no matter what your interests are
The catastrophic advice provided by Hurricane Financial shows that consultants can be charged asset-based fees.
It is strongly recommended that you invest the borrowed funds in order to increase the cost as the investment balance increases.
How do you find a consultant that meets the needs of each of them?
Starting with an independent consultant:
It does not own any manufacturer, nor is it affiliated with any manufacturer.
It does not receive any commissions or benefits from the manufacturer
But pay attention to fake “free” consultants, especially those who call themselves “free property”. According to Article 923A of the Company Law, the use of the word freedom is prohibited, and as of January 1, 2018, unless the requirements of s923A are met, the use of “free” or similar terms has become illegal. But many consultants continue to use the term “free” (or neutral or neutral, which is also a restrictive term).
To determine whether your technical advisor is independent, check the Financial Services Guide and search for the terms “commission” and “amount bonus”.
Check if it owns or is related to any bank or financial institution that produces products such as loans, insurance, pensions or investments.
How to Choose a Financial Planner Service
Financial planning can help you reach your goals. But what if you don’t have time, willingness, or experience to plan and execute on your own?
The Singapore Financial Planning Association is the global financial planning standards body and a non-profit member of the Financial Planning Standards Board (FPSB). It is recommended: “Financial planning can help you consider tooling staff.”
A study by FPSB member organizations found that consumers lack confidence in achieving financial goals but are interested in financial planning services to help them achieve their financial goals.
Surprisingly, many people say that they rely on friends and family to obtain information about financial matters and financial plans.
FPAS says: “Financial planners can provide in-depth experience for your case, help you execute the plan, and often provide objective views on money emotional issues.”
However, finding an effective and ethical financial planner can be a challenge. In most countries, financial planners are not organized in this way, so anyone who is qualified or unqualified can declare themselves as a financial plan. You need to carefully plan a reliable financial plan.
Tips for choosing a financial planner
FPAS provides the following suggestions regarding the selection of authoritative financial planners.
Find a real plan. Don’t confuse financial plans with stockbrokers, insurance brokers, bankers, or accountants. Even if these people say they are planners, they can focus on only one aspect of your financial life, such as your investment, insurance, or taxes.
A true financial planner will consider all these factors and use the financial planning process to define goals and provide you with a comprehensive strategy to achieve these goals. Certified financial professionals who have been trained or trained can use this holistic approach. Look for the symbol of professional excellence-CFP, registered financial planner, and CFP logo.
Choose what you need. Your financial planner may need to develop a comprehensive plan to identify cash flows, debt, investments, insurance, taxes, and inheritance plans.
You may prefer to hire planners who have experience in certain areas (such as small business plans or retirement plans). By specifying your needs, you can narrow your choice.
Suggestions require suggestions. Your accountants, lawyers, business partners, and friends are potential sources. Another source is the FPAS website https://fpas.org.sg/find-me-a-planner/, where you can find CFP professionals closest to you.
Meet many planners. Many planners provide ad hoc meetings for free, so you can see if the setting is suitable for your needs.
In the interview, ask the following questions, and listen to the plan to answer these questions publicly, and pay attention to your goals and needs.
How do you effort with customers? Find out if the plan uses a financial planning procedure that starts with your needs and goals, and examine your specific condition before making recommendations and monitoring the project over time. Ask the planner if there are customers like you?
What is your salary? Some planners charge a fixed fee or hourly wage for their services, or a certain percentage of assets under management.
You can get commissions from products sold as part of another financial plan. Or, their compensation may involve several methods. Make sure you understand and wear compensation arrangements.
Do you follow customer standards first? Find a plan that promises to put your interests first. For example, CFP practitioners first abide by customer standards under their code of conduct.
Verify. Call the reference to check the official database to see if the project has professional experience. If the planner claims to have the credentials, please verify it with the resettlement agency.
Follow your intuition. Relationships are also important. Choosing a plan, you may be comfortable sharing your goals, dreams, fears and financial information-which may last for many years.
Do you need financial planning services?
Whether you are exercising, quitting alcohol, or treating any health problems, building a house or considering financial management-all of these have two ways to get it, either seek professional help or do it yourself.
The decision to seek professional help depends on many factors and varies from person to person.
Let us look at an example of building a house. Therefore, a person can decide to hire a personal engineer based on their budget, project size, and type of internal needs.
Otherwise, you can simply go to the local contractor and take care of his shoulders.
No one’s financial plan is rocket science that you can’t do. This process is not a difficult combination of simple financial strategy and simple account, but more important than confiscation.
Even if you don’t have a sound plan and other advice from a professional financial planner, if you are really enthusiastic and disciplined, you can take care of all your money yourself.
If you are standing by, the following factors will help you in this process.
Understanding the current and future value of money is critical to the “self-work” of economic planning. There are some questions to answer. These problems may include knowing how much body a person needs to retire comfortably.
Understanding various tax benefits, savings and expenses will also be useful. After that, one must understand the impact of inflation on financial resources. Other inquiries may include an understanding of stock market investments.
This understanding is now widely available in print, television, and online media. If a person can spend a lot of time instead of working hours, then it is not difficult to answer these questions.
In managing finances, time is of the essence. People need to acquire knowledge about personal finance and product knowledge.
Its various forms are the financial aspects of daily newspapers, television, and the Internet. There is a lot of information everywhere.
Everyone needs to use different terms and products available in the fields of banking, insurance, investment, etc. Then, anyone can know their needs, set financial goals, compare products, and learn. It takes a lot of time. Use and calculate financial calculators and implement them.
Controlling your funds is a permanent process, which cannot be completed overnight, but requires regular investment.
For those who cannot make such a commitment, they can always choose a financial planner who will be responsible for all the processes of providing advice and implementation for the plan.
Therefore, you can spend less time interviewing projects, understanding projects implementing and reviewing projects.
This huge element will no longer exist in the next few years. Today, the number of “certified financial planners” in our country has decreased, and it seems to be even less.
Celebrate this small number in big cities. As consumer demand increases, the situation is changing rapidly.
Therefore, if you have a competent, actual financial planner who can provide you with the services you need, then you may need to consider hiring him. When performing this operation, you should check its overview, graphic structure, background, etc.
Experienced and professional financial planners can be an expensive option. A person who is willing to spend money is a completely reliable option. However, you can limit the ability to pay.
Affordability is an easy adjustment, that is, a person can save valuable time and effort and pay appropriate professional advice. However, no one should be the decisive factor.
In addition, if things become easier, please try to “complete it yourself” before seeking external help. It is important to start somewhere and take basic steps to make your plan a reality.
Financial Planner Service Fees
The establishment of consulting fees depends on various methods from service consultants to charging, in addition to the business, but also includes the customer’s target market (and the fees they can or will pay). Financial advisors’ self-income goals and expectations (and what they are trying to achieve).
However, the following are some common methods for calculating administrative expenses:
With the fixed fee calculation option, you can specify appropriate fees for the services you provide to customers and charge these fees to all customers throughout the year to provide this service.
With the net fixed-fee model, services between customers will not be significantly different, so the same amount is imposed on all customers because the real meaning is that they can all get the same service at a reasonable price.
This framework is best suited for clearly defined skills or other target market consultants. In this case, the standard fees of the standard service model are meaningful to the consultant and its clients and are relatively easy to define. should
Based on the level of service (layer). With the graduation fee option, customers must charge different levels of fees based on the depth of service provided.
Hourly fee (depending on time). This method of calculating fees is very intuitive: the consultant only charges for the time actually spent with the client. As long as they have a certain payment method, they allow consultants who work hourly to work with clients regardless of their assets (availability).
For most consultants’ business models, an additional benefit is that hourly fees generate immediate income because most consultants estimate the fee “immediately” at the end of the meeting (unlike the commission-based model).
If a consultant is not appointed and paid before the product is sold, processed, and paid for the commission, or the AUM form is used (the first quarter of the AUM fee is not charged within a few months after the relationship begins, the first AUM fee is not charged).
The hourly fee structure Sheryl Jarrett, the founder of Jarrett Planning Network, began financial planning for the service in the early 2000s and considered financial planning costs through other means than AUM.
However, although the implementation of hourly charging is an important step in achieving a more profitable financial plan than service, the fact is that there are still few large-paying companies that have successfully developed watch models.
Project-based cost Although the structured fee charged by the hour only depends on the number of hours of extra work with the customer, the project-based cost is the total time the customer completes the project.
Based on estimates (and the cost is predetermined) (the consultant will spend an hour), or consider the cost of the project (and the time the client deserves).
The most attractive aspect of project-based fees is the opportunity to determine more comprehensive pricing based on the total cost of services provided (including “only” based on working hours). Although this is practical, consultants are still needed to effectively provide enterprise value. Their general recommendation.
In addition, like time-based expenses, project-based expenses can also be provided as a more standard component of the plan, making the financial plan available to potential customers who have only a few problems and cannot prepare a complete financial plan.