The past few years have been tumultuous for the Financial Services Industry, dominated by Government intervention and the introduction of new legislation.  Some aspects of this legislation has been highly controversial and faces constant debate, scrutiny and lobbying for change.  Why the fuss?  What does it all mean?  How does any of this affect the man on the street?

Changes have been made to try and protect consumers.  We all remember Westpoint, Storm Financial, Wickham Securities — the list could go on from there.  All were examples of greed and self-interest, coupled with lack of supervision, leading to many small investors losing their life savings.  Also, financial services have traditionally been sales based and commission driven, creating the potential for advice to be skewed towards the remuneration of the adviser, rather than the best interest of the client.  Legislative change has endeavoured to correct some of this bias and return the focus to benefitting the client.

Unfortunately, this protection has come at a cost.  Advisers must now satisfy complex, stringent compliance criteria and produce copious quantities of paperwork.  What was designed to protect and safeguard, has had the unintended side effect of adding cost.  Any advice given must be substantiated, because it is important to be responsible with hard earned savings.  However, the cost now precludes some people from seeking simple advice, which is a setback for the entire country.  Rather than fight against the system though, we must accept that protection comes at a price and be vigilant about finding out what we are actually paying for.

Real Estate agents commonly quote the Latin phrase ‘caveat emptor’ which loosely translates to ‘Buyer Beware’.  This is equally apt for financial advice, not as a justification for bad service, but as a warning to consumers to ask questions and make sure they understand what they are getting.  Ask what is involved and how much it will cost, then make an informed decision.  Advisers who are proud of their service will be comfortable discussing this with you.