No wonder community trust in our financial system is at an all-time low.

More revelations in recent weeks about misconduct at the highest levels in our major financial institutions show that they just don’t get it.  When it comes to financial advice, it’s becoming clearer and clearer that the financial services industry has become unhitched from community expectations.  

A service industry that doesn’t know how to serve

We believe the core issue is that the institutions just don’t recognise that banking is fundamentally different to financial advice. 

Banks serve an important function in the financial system.  But banking is, by its nature, transactional.  Especially investment and institutional banking, where equally informed parties strike deals with each other.  Every time they do they focus entirely on their own self-interest, trying to negotiate the most money for themselves from each transaction.

Financial advisers are fiduciaries

Contrast this with financial advice, where there is a relationship where one party is tasked with acting in the best interests of the other.  One party (the financial adviser) is sophisticated and informed.  The other party (the client) is less informed and seeks out services because they need help.

The community expects financial advisers to serve their clients and their clients alone.

Institutions fleeing from financial advice

Mistakes in the major institutions have been costly. Together they’re paying out billions of dollars so, it shouldn’t be a surprise that all four of the major institutions are now getting out of the financial planning business.  

At a local level here in the North West and New England, we’re seeing financial planners in some of the institutions lose their jobs.  Other institutions are clearly changing focus, reducing their regional services and pushing digital.

That’s bad news for the region because quality financial advice has a transformative positive impact on clients.  CoreData research shows that people who have an active relationship with a financial planner are wealthier, have more peace of mind and are able to spend more.

And while supply of services locally is reducing, demand is increasing.  Our Baby Boomer generation is retiring and will require advice on their super.  Our Silent Generation will need help with aged care so they can grow old with dignity.  And over the next decade over $1.5 trillion will be transferred between generations in Australia alone.

What’s been forgotten

In all of this, the institutions have forgotten that serving the community as professionals is a privilege.

It’s not a new idea.  Over two thousand years ago, Aristotle summarised it elegantly, saying that fulfilment is found in “loving rather than being loved”.

And that’s why we created When Financial Solutions. The reality is it’s an honour to serve the people in the North West and New England regions of NSW.  To help them make informed decisions so that they have the confidence to spend money, safe in the knowledge that their retirement plans are sustainable.

We work with our clients to help them understand when they can achieve the things that are important to them.  When they can retire; when they can stop working and start doing things they’re more passionate about; when they can buy the caravan and start to travel; when they can renovate the kitchen; when they can study that course; and when they can take time out to teach the grandchildren to drive.

Our advice gives our clients confidence.  So, it’s not a matter of ‘if’ they will achieve their goals, but ‘When’.

Michael Bowman and James McMaster are co-founders of When Financial Solutions