In this guide
Independent financial advice has been topical in recent years thanks to the Financial Services Royal Commission into misconduct in the banking, superannuation and financial services industry.
The key word here is ‘independent’. So, what does it mean in the context of financial advice?
Definition: Independent financial advice can be broadly defined as advice that is impartial, unbiased, without any potential for a conflict of interest and solely with the client’s best interests at heart.
You would hope that every financial adviser can claim all those things, but few can because there is a very technical definition behind what makes financial advice truly independent.
Examples of financial advice that is not independent include advice provided by advisers who:
- Receive a commission (or any other gift or benefit) for recommending specific products and services issued by a financial provider
- Receive remuneration based on the volume of business they place with the issuer of a financial product or service
- Work on behalf of a specific financial organisation and are therefore limited to recommending that organisation’s products or services.
