26 Feb Unhappy investing with your bank but need advice you can trust?
If you’ve been following the financial press you may have read about the Royal Commission and its review of misconduct in the banking, superannuation and financial services industry in Australia. You may have also heard about the Reserve Bank (RBNZ) and Financial Markets Authority (FMA) review of conduct and culture in New Zealand retail banks which was in part prompted by the Royal Commission. On the back of these reviews you may be wondering if your bank is working in your best interests.
Whilst the issues covered by these reviews are complex, there is now a spotlight on the role financial incentives have played in relation to misconduct leading to poor customer outcomes, particularly in regard to the “big four” Aussie banks. Quoting the Royal Commission “in almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business. Providing a service to customers was relegated to second place.”
So ask yourself, is your financial adviser or the bank they work for acting in your or their best interests? There are a number of questions you can ask to help determine the answer.
- What proportion of your bank adviser’s remuneration is linked to sales or financial targets?
- Will the advice they provide you in any way affect their remuneration?
- What proportion of your money has been invested in the bank’s own products?
- Are there any other related party benefits associated with the advice given to you?
At Saturn Portfolio, we believe in creating a culture of good conduct and ensuring client interests are put first, which requires us to address and where possible remove potential conflicts of interest. This is why all our financial advisers are paid a fixed remuneration. It is also why they don’t receive financial incentives for the advice they provide, and its why Saturn Portfolio* does not have a financial interest in the investments it recommends to clients. This is what we call impartial advice.
We also believe that creating a culture of good conduct requires having the highest standards of ethics. This is why we have enrolled our staff and directors as associate members of the CFA Society New Zealand, which is affiliated with the CFA Institute, a global association of investment professionals whose mission is to lead the investment profession globally by promoting the highest standards of ethics, education and professional excellence.
If you are unhappy with investing with your bank, there are options. You can go to another non-bank financial institution, such as a share broker or fund manager or you can go to smaller independently owned businesses providing financial advice. Make sure the adviser you are looking to use is authorised to provide advice. You can check this quickly by going to the Companies Office website. https://app.companiesoffice.govt.nz/fsp/app/ui/fsp/record/searchFsp.do?adv=false
Don’t forget to ask a few questions about how they and their business gets paid and get them to explain how they will ensure your interests come first.
If you’d like to talk to us about how we can help you, call us on 0800 757 858 or go to our contact page and send us a message.
*Saturn Portfolio operates a registered superannuation scheme through wholly owned subsidiary Saturn Invest New Zealand Limited but does not have a financial interest in any of the investments available via the scheme.
Please refer to the legal disclaimer accessible from the Saturn Portfolio home page which applies to this article.