Quality in the financial planning industry can only truly be defined by its clients, says TWD managing director Troy MacMillan.
Advice must put clients’ interests before the adviser’s and should be able to be replicated no matter who is giving the advice, and should have no conflict or perceived conflict with products, partners or platforms.
But this doesn’t mean saying “yes” to every client’s whim. In fact, true high-quality advice can mean the opposite.
“High-quality advice is that which we believe is required, not always what the client believes they need – the client isn’t always right when it comes to the advice required.
“It isn’t always right for everyone [because] it isn’t something that can be moulded for all sizes, shapes, and tastes.”
With more than two decades of experience, and more than a few awards under his belt, MacMillan knows his stuff.
He courted controversy three years ago, when a YouTube clip referencing leveraging a self-managed super fund inadvertently put him on the front page of the Australian Financial Review.
But despite this, MacMillan has maintained his status as one of the country’s most trusted advisers.
First step to independence
Getting his own licence was the first step to full independence, and he now charges annual fees based on the value of advice given.
“We strip all other fees, commissions and charges out for the client so that they know exactly what the true cost is for the advice and, most importantly, why they are paying for the advice.
“At the end of the 12-month period, we re-engage [in] paying particular attention to their unmet aspirations and unresolved complexities so that we can base our fees on the value that we can provide in the following 12 months.”
MacMillan has strong views on what type of advice should be considered as professional, independent and for the benefit of clients, and says regulation is moving in the right direction.
“To deliver professional advice there can be no payment attached to any product, platform or third-party supplier – current regulations are moving in the right direction, but I believe that they still have a ways to go.
“There will always be conflicts whilst the main product manufacturers own and use the advice network to distribute products.
“Whilst the advice industry is structured this way, the advice relationship will always revolve around financial products, instead of the aspirations, complexities and behaviours of the client.”
Education won’t be a silver bullet
He says even education won’t be a silver bullet for the industry’s reputation.
“Ultimately you can’t legislate people’s ethics and behaviours, so while improving the education levels of advisers is a good thing it is up to the industry to become a profession.”
Much of this rides on the commercial nature of the business and how planners are able to make money. TWD is structured to maintain independence while earning enough to prosper.
It aims to make a minimum of 40 per cent profit per annum from every active advice client, with the notable exception of its pro-bono clients.
“We aim to have approximately 80 per cent of our active advice clients return year after year, as maintaining renewal clients is important for every service business.
“Commercially, the non-conflicted advice model provides far more control than a conflicted model based upon influences such as markets, product manufacturers or hourly timesheets where workers, clients and partners lose focus on serving the client not their products or timesheets.”
In regard to the future of the profession, MacMillan, like many others, sees the internet as a true game changer.
“It will kill the product-based adviser and their aligned support structures such as old-style dealer groups and product shop.
“This will in time leave more room for the non-product or platform professional adviser to flourish and take their space.”