This is a question we get asked a lot. When we talk about ‘product’, we mean any product or service that we recommend when we meet with our clients: superannuation funds, super income streams, account-based pensions, investments and so on. But the simple answer is no – we do not.
Getting paid to sell a product to clients is now banned for financial advisers anyway. But we’d like to take this opportunity to say that we never did that in the first place; never in our ten-year history. One might like to think of us as the ‘hipsters’ of financial advisers – you know, the cool guys who were doing the whole honesty thing before it was legally enforced. Before it was ‘mainstream’.
Jokes aside, you can see why it’s an important question. Back in the day, many “financial planners” (note the quotation marks) did what they did for monetary kickback. Being a financial planner was just a sales process until it was outlawed. Occasionally we see some previously used agents getting a kickback from our clients from a product that was recommended to them many years ago, and the client is none the wiser.
So how do we get paid? We have a percentage-based fee. We charge 2% of your superannuation in the first year, then 1% each year after that. It is in our best interest, then, to ensure that our clients maximise their earning potential (as an average example, we would try to get clients’ super balances from $500,000 to $1.5 million in the last ten years before retirement). Recommending good products is in our best interest as well as our clients’. We genuinely care about our clients, and it’s not just financial value we think about – we want to ensure they are happy with our advice and are able to reach their retirement goals.
Having talked about recommending good products, it’s important to acknowledge that no-one can predict which super fund will perform the best – we can only look backwards. The products we recommend are simply based on what we would use ourselves or recommend to our parents. And somehow, unintentionally, referring to the “parents promise” seems to put our clients’ minds at ease!
Dallas Davison, Michael Hogue and Ali Hogue.