Financial planning and the royal commission

Financial planning and the royal commission

As a Financial planner who is proud of what my colleagues, my competitors and I are able to do for our clients I have been saddened by what we heard last week at the Royal commission. The poor behaviour of the banks and AMP (who own my licensee) has cast a shadow over the whole industry.

AMP caught lying to the commission, banks use of product targets and the story of horrible advice leading to a couple losing their home. This is all a terrible look for the industry and is horrifying for people like me who strive to improve their client’s situation.

The advice industry has undergone significant change over the last 15 years with two legislative reforms in Financial Services Reform (FSR) and more recently the Future of Financial Advice (FOFA) and in my opinion is better for the changes. These reforms have seen increases in education requirements, enhanced documenting of advice and changes to remuneration for the industry. There are now strict guidelines in relation acting in the Best interest of the client and dealing with conflicts of interest.  At times the administration for this can seem onerous for both advisor and client, but is designed to ensure the client is in a better position at the end of the process.

Some of the problems being revealed at the royal commission are due to institutions not dealing well with the changes to the industry. Historically the remuneration structure of the industry worked where although most of the work was done up front, b most of the income flowed for years after the initial advice. In some cases not a lot was done on an ongoing basis to earn the income. This was not a sustainable and model and has long since changed. There are a lot of legacy products that still work on this style system. This has led to the fee for no advice system that has got AMP and the banks into to trouble.

Furthermore in the past the advice fee and product fees were linked. A single fee was charged with a portion being paid to the advisor as a trailing commission. So while ever you had a product, the advisor was being renumerated for work done years earlier. Although this practice ended about 10 years ago, many products pre-date this change. These trailing commissions still exist and are a bad look, and quite rightfully provide clients with doubts.

All that said, I deal with a lot of local advisors in the area and Im very confident that almost the all the advisors in Penrith (who are my competitors) are not only ethical and operate with the best interests of their clients the heart of everything they do, they are also great at what they do!

When I started as an Advisor 16 years ago I received advice from an experienced advisor Paul Mullock who still operates today that I think about every time I sit down with a client ; “Think about the client’s dough and yours will take care of itself”.  I reckon most advisors have a similar mindset despite what we heard at the Royal Commission last week.


Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services


  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State


  • University of Western Sydney
  • Penrith High


As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

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