Throughout the ages philosophers have pondered the very nature of humanity. From Augustine’s doctrine of original sin through to Jean-Jacques Rousseau’s discourse on inequality, the question of whether humanity is innately good or bad has been contemplated, discussed and fiercely debated.
In recent times this study of whether we are good or bad, cooperative or selfish has been bought into our homes through television shows such as Big Brother and Survivor. Our news programs are often filled with stories of the bad side of our nature and occasionally we see stories of how humanity can come together to act for the benefit of one person or a community.
While no single study can ever provide a definitive answer, in 2012, a group of researchers from Harvard and Yale sought to answer whether our automatic impulse, our first instinct, is to act selfishly or cooperatively. After numerous studies, experiments and 2,068 participants, the researchers concluded that our initial response is to act in a cooperative manner i.e. we are innately good. They also found however, that once we have time to reflect before making our decisions, our ability to act selfishly increases dramatically.
Unfortunately, the recent Royal Commission on misconduct in Financial Services has highlighted numerous situations where our initial impulse to act for the good of the community has been overrun by others’ ability to look after their own self interests. So far, we’ve heard stories of people being charged fees where no service was provided, insurance companies continuing to charge on policies where the insured had passed away and people being sold products that they did not need thanks predominantly to the high commissions received. None of these actions, nor the hundreds of other cases, are indicative of the good side of humanity. In most situations, they simply reflect greed.
While there were many bank owned businesses who feared the Royal Commission, we wholeheartedly welcomed it and hoped that the spotlight would be turned on some industry practices that we shunned. When we established our business, we set out to create a company that was totally free of conflicts in any form. We took considerable time to gain our own licence so that we could consider and advise on any platform or product that we felt was most appropriate for our clients’ needs. We also took the path of refusing to accept any commissions, perhaps a nod to our accounting firm heritage, and since we established the business, any commissions due have been passed straight to our clients.
We wrote about the Royal Commission in our article in May and seven months later, the headlines continue to erode public trust in our industry. While the outcomes of the Commission are not yet known, there have been numerous surveys of the general public on their thoughts and views on the banks, superannuation, insurance companies and financial advisors. The public have also been voting with their feet as they have been moving banks and switching superannuation holdings to large industry funds.
There are still millions uncertain about their financial future, the biggest concern being that they won’t have enough money to last their lifetime. Unfortunately, the number of people seeking advice has fallen and is likely to continue doing so while examples of poor service dominate the media. Given what’s been uncovered so far, you certainly can’t blame people for being wary about who to trust, the level of fees charged, commissions received, conflicted products being sold and lack of communication from their advisor.
Recent research has indicated that approximately one third of respondents want to receive advice from an independent financial advisor. We believe this is a good starting point, but there are also a number of other key questions to ask:
- Do you trust your advisor is acting in your best interests?
- Do they listen to you and understand your circumstances, needs, goals and objectives?
- Do they communicate with you regularly?
- Are they transparent about all the fees – advice fees, commissions (if they take them), brokerage and any other fees that you are paying?
- How experienced and qualified are they to provide the best advice?
- Do you value their advice?
While positive answers to all the above may still not ensure your existing or a prospective advisor is the perfect fit for you, these questions will hopefully point you in the right direction and help weed out those who are only acting in the own self-interest.
The Royal Commission has rightly placed the spotlight on the negative aspects of the industry and no doubt suitable legislative changes will follow. We welcome those changes and look forward to continuing to help our clients achieve their goals for many years to come.
Andrew Aylward is Chief Investment Officer at Keep Wealth Partners.
Keep Wealth Partners Pty Ltd (AFSL 494858). This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from a financial planner who can consider if the strategies and products are right for you.