Former planner finds success in discount managed funds space

A former financial planner who was disappointed with some of the industry's practices is finding success in his new business in the discount managed funds space.

Hamish Pym worked as an accountant and then financial planner for more than 10 years before making the switch.

Pym said he was “gob smacked” by a trend by some planning practices to accept ongoing trailing commissions “without doing much work [for the clients]”.

Pym said he didn't like the attitude of planners who "receive a whole heap of cash for something that they did 15 years ago and then haven’t revisited since".

"And I’m sorry to say that that’s 90 per cent of the market out there.”

In response, Pym established iRefund, which rebates the commissions normally paid to financial planners back to clients. Over the past 18 months iRefund has attracted significant business in an environment where many clients are becoming “more and more dissatisfied with their planner”, Pym said.

But despite his business taking some of the income formerly going to planners, Pym argues his business model can work in alignment with financial planning businesses.

The group has a number of fee-for-service financial planners it refers clients to where they request advice. They include Creative Wealth Management, Property Planning Australia and Australian Independent Financial Planners.

“Financial planners who offer advice on a fee-for-service basis won’t lose any of their clients because they’re actually giving them service,” Pym said.

“The people that typically come to us — the story gets repeated time and time again — [say] that they haven’t heard from their planner … they saw them once 10 years ago and haven’t heard from them since,” Pym said.

“Don’t get me wrong, I know the value of a good financial planner and how much value they can create. My issue is that a lot of them don’t do their job.”

iRefund withholds a maximum of $390 per year from its clients, and rebates 100 per cent of amounts over $790. By comparison, discount managed fund broker InvestSmart refunds half of all commissions over $300, meaning they too are in a way “on the gravy train of commissions”, according to Pym.

As well as managed funds, the group also offers commission rebates on home loans, margin loans and personal insurance policies. For margin loans, the group recovers not only the commission on the loan, but the trail on the underlying investments.