Lorica Partners is Independent - what does this mean in practice?
Transparency and alignment between adviser and client have not always been strong in financial services. The recent Royal Commission into Financial Services revealed as much. Many advice firms were found to be claiming to be ‘independent’ to their clients, when the reality of their remuneration structure and relationships meant this was not the case.
From 1 July 2021, the regulator ASIC has required all financial advisers to disclose to clients if they are independent, and if not, why not.
To be independent, a financial advice firm must comply with s923A of the Corporations Act, which means an adviser must not receive any of the following:
Commissions
Forms of remuneration calculated on the volume of business placed with an issuer of a financial product; and
Other gifts or benefits from an issuer of a financial product which may reasonably be expected to influence advice.
In addition, the adviser must operate without any conflicts that might:
Arise from associations or relationships with issuers of financial products; and
Reasonably be expected to influence the adviser.
Setting aside the legal definitions, independence should result in confidence of better outcomes being achieved because the advice you receive has no bias or preconceived ideas.
Lorica Partners is proud to tell our clients we are independent under any definition you wish to apply.
To give our clients confidence in the advice they receive, we think it is essential you know your adviser is independent and our interests are always aligned. The main benefits of being independent are:
A Champion for your success – there is a saying people don’t buy drills, they buy holes. The hole is the outcome they need, and the drill is the means to the end.
Our clients engage us to achieve outcomes. We have drill bits in every shape and size to cover investing, estate planning, superannuation, retirement planning and more, but ultimately these are tools to help address the things that worry you and give you confidence you can enjoy the life you aspire to.
Knowing your adviser has no other motives other than to help you achieve what is most important to you should deliver peace of mind. The only income we earn is paid by our clients. The only way we grow is clients having a great experience and recommending us to their friends and family to share in this. Achieving both these outcomes is predicated on us helping people achieve the outcomes they need.
Act as a fiduciary – Independence is a cornerstone for us to act as a fiduciary to our clients. Our commitment to act as a fiduciary is evidenced by our CEFEX (Centre of Fiduciary Excellence) accreditation (www.cefex.org). We will maintain this fiduciary standard of excellence.
Employer of choice – it has become clear the best advisers want to work for an independent advice firm. This will help us continue to attract the most talented and committed advisers.
The feedback received from clients and other professionals we work with, like accountants and lawyers, about our independent status has been overwhelmingly positive.
However, we are mindful it is not just saying we are ‘independent’ or ‘CEFEX-certified’ that counts – it is what you must do to earn and maintain these designations that matters. The actions behind the labels.
Our purpose is to help people prepare for, and lead them through, major life transitions like retirement, passing wealth to the next generation, selling a business, or loss of a spouse. Whilst some see working with an adviser as an expense, we know working with an independent adviser is an investment in your future. Some of the areas we help are:
Purpose - We work hard to uncover what is truly meaningful to you. We do this by listening more than we talk.
Honesty - We help you set realistic expectations about controllable actions and probable outcomes. Most people, understandably, think about and plan for best case scenarios. Sometimes you need someone to help you see and protect against other scenarios.
Control emotions - Provide ‘emotional guardrails’ to decision-making during tumultuous times. It helps to be reminded of the plan you created and are working towards when tough times arise.
Wide-ranging - Have a comprehensive plan which may consider factors you may not have considered yourself, like tax planning or the impact of inflation on your retirement spending. New laws and regulations are passed every year that can impact your plan. Life is short and engaging an adviser to outsource the need to track these changes provides the gift of time.
Address complexity – we advise upon structures that allow flexibility so that changes in an area of one’s life does not create unforeseen problems elsewhere. When dealing with complexity, it is important to know what you can and cannot control. We plan for the inherent uncertainty of life and financial markets.
Disciplined – we do not let today’s events or noise from the media drive impulsive actions.
What should I do? - A long-term relationship with an advice firm means your team of advisers know you, your spouse, your children, your dreams and your goals. When unexpected events arise – which they frequently will – we are well-positioned to help you navigate the course and make informed decisions.
In summary, we think being an independent financial advice firm helps our clients resolve one of the primary reasons they engage us – to achieve peace of mind. Lorica Partners will always be independent and free from conflicts of interest.
We think it’s an investment worth making.
Author: Rick Walker