The Financial Adviser, Value Creation and Remuneration by Richard Cornell, Institute of Actuaries of Australia
This paper was written before significant amounts of red tape was introduced and commissions were banned.
Some might say the red tape and the banning of commissions had no effect on the behaviours of banks and big corporates as evidenced in the 2018 Royal Commission into Banking uncovered. Banking royal commission: The financial sector’s descent to the fourth circle of hell – ABC News (Australian Broadcasting Corporation)
Financial advice is an intangible product. It is ephemeral, you can’t touch it. It can be quite expensive.
People can find it difficult to understand what value they are getting from an adviser. Even after getting advice and implementing a plan, the value of that plan can only be compared to some hypothetical alternative course of action. One of the problems that the financial advice industry faces is convincing prospective clients of the value of their product.
Much of their value comes from providing a disciplined approach to customers’ financial planning needs. Additionally, there are times where advisers can assist customers in maximising their after tax income, including accessing government benefits. Estate planning is also an important area where advisers can add value for
Presented to the Institute of Actuaries of Australia. Third Financial Services Forum 11-12 May 2006