Advice tainted by product focus

16-Jun-2016

By Daniel Paperny

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Financial planning as an industry was too focused on product selling rather than advice and education, according to fintech group MapMyPlan founder Paul Feeney.

Speaking to financialobserver, Feeney said that in an industry where trust was the currency of face-to-face interactions, it was imperative financial planners helped individuals structure a strategy to meet individual financial goals where actual investment was “the icing on the cake” rather than the main focus.

According to research from Investment Trends last month, around 80 per cent of Australian respondents did not use a financial planner and were uninterested in engaging one, compared to around 13 per cent who used a financial planner and 7 per cent who did not currently use an adviser but intended to engage one within the next 12 months.

Feeney said fee commissions and monetary incentives for advisers to push products had resulted in an industry marred by misconduct, as well as a growing number of Australians who were not interested in a relationship with a financial planner.

“I want to challenge the status quo where written advice is used as the means to justify selling a product. I think that’s got to change, I think the industry knows that and it’s moving that way,” he said.

“If we don’t, then we’re just a sales channel and no one at the other side of the table can be 100 per cent sure the advice is right for them.”

According to Feeney, the key impetus for seeking financial advice was for an individual to gain control over their financial lives. Separating product from advice was therefore the only way individuals could be assured the advice was not tainted, he added.

He said MapMyPlan’s online virtual financial planner was geared towards building financial literacy and empowering clients to be confident in managing their finances, in addition to allowing the conversation to be escalated to an adviser in situations where comprehensive advice was needed.

“There’s always going to be a need for financial advisers, but at the moment they’re not doing a good enough job as there’s too many people not getting advice,” he said.

“I think the only way you can do that is through the scale that the internet provides.”

MapMyPlan would add a series of scenario financial modelling enhancements to its offering next month, with plans over the coming months to map a client’s investments and the impact of life events on achieving individual financial objectives, he added.

“This will look at how you manage estate planning as well as how you account for situations like divorce, redundancy, major illnesses in the family, receiving an inheritance and so on,” he said.

“People can start seeing what certain financial decisions will mean in the future – it’s empowering them to see the implications of those things.”

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