PIFA helps advisers avoid conflict of interests

The Profession of Independent Financial Advisers (PIFA) has created a decision tree to help advisers understand the complexities of variable income.

In its guidance paper on the Code of Ethics, the Financial Adviser Standards and Ethics Authority (FASEA) previously warned about how variable income, which includes asset fees, commissions and brokerage fees, can induce advisers ‘to cross that invisible line’.

PIFA’s flowchart would help advisers to understand the in’s and out’s of variable income and prevent any conflict of interest occurring.

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“Any business analyst worth her salt will tell you that if there is a risk threatening your practice, before you consider ways to mitigate it you should first ask yourself whether it can be removed altogether – problem solved with zero risk. Many advisers lose a lot of revenue when they change their remuneration structure because there is something missing from their plan.

“What’s missing is ‘The Variable Income Decision Tree’. This flowchart provides practitioners with a roadmap to approach clients and make the transition from variable income to conflict-free remuneration. The benefit is that not only do you get to keep as much revenue on the table, you can actually build on it to make the exercise profitable,” the organisation said.

The flowchart is available for advisers to download.


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There is no such thing as conflict free remuneration. Even fee for service is conflicted remuneration. A classic example is charging a client $5,000 pa to manage and administer an SMSF, when the client could have achieved just as good an outcome from an off the shelf product at a fraction of the price.

Remuneration method is NOT a determinant of ethics and professionalism. It is a red herring. Any adviser who tries to use remuneration method as evidence of their "professionalism" is probably trying to hide broader unethical behaviour.

Doctors don't receive the majority of their income from patients. They receive much of it indirectly via Medicare, private health insurers , and public hospital payments. Does this mean they are unethical and unprofessional? Of course not.

Some of the most unethical doctors are surgeons who bill patients directly for unnecessary, overpriced operations. These are the doctors whose remuneration methods most closely resemble that espoused by Brammall and his merry band of hypocrites.

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