07 May The Royal Commission, Orion & You
The Royal Commission into Banking and Financial Planning has drawn to a close last week and the findings were critical of the conduct of members throughout the banking and financial planning industries.
As we provide our clients with financial and insurance advice we felt it was very important to put together a response to the findings of the commission so that you can feel reassured that you can continue to work confidently with us at Orion Financial Group.
What did the Royal Commission find was wrong?
The main criticisms were that advisers and the banks did not provide their clients with appropriate advice and were specifically interested in making the product sale rather than how the client could be in a better position following their advice.
The findings showed that bank employees and advisers were paid additional incentives to sell ‘in-house’ products and services to a client. This involved additional bonuses and, in the case of the supposedly independent advice from Maxwell Henderson, in addition to the very high ongoing charges paid to the adviser at Maxwell Henderson, the client was being invested in a product part-owned by the adviser, which was not disclosed to the client.
Often the products that the adviser could offer were limited to the banks own offering (i.e. a choice from one insurer) or a product list for investment that was stacked with bank products with additional volume based incentives to use these in preference to the competition.
In these arrangements there is an obvious conflict with the product owner influencing the advice. The clients own needs were coming a distant second to the benefits payable to the adviser.
How does Orion Financial Group Operate to avoid these issues?
Firstly, Orion Financial Group is a family-owned business and we pride ourselves on providing our clients with strategic advice and recommendations to first and foremost suit their needs and goals.
We are constantly working with a number of product providers to understand what can work best for a given client situation. Further, our license holder Aon Hewitt Financial Advice supports us with access a wide selection of insurance and investment products to choose from for our clients. We understand that any one product may not be suitable for our clients because everyone has different circumstances.
This range of products has been reviewed by Aon Hewitt Financial Advice and the list offered to us as advisers are those of good reputation and a stable history of doing the right thing.
We use this approved list as a guide and then do our own research. We look at the outcome offered for the price paid (ie: value to our clients) and any specific features that may provide you with an additional benefit over the offerings of the nearest competitors. In short, any time we are providing you with a product, we have carefully compared it with 3 or more of its nearest competitors before arriving at our final decision. In fact, within the insurance space we are comparing 10 product providers for our clients. All of this puts us in a position to choose the appropriate product for you based on your needs and any direction that you give us.
By working in this way we can show that there is a clear and reasonable link between the product we recommend and the service and benefit you seek!
Other measures we have include our internal and external audit procedures to ensure we are compliant and working in our client’s best interests. Aon Hewitt Financial Advice conducts our external audits every 6 months and internal audits are conducted on a consistent spot-check basis.
To address remuneration conflicts and ensure the right product is recommended for our clients, commissions are not paid to advisers. All our advisers are paid on a salary basis only and do not receive any incentive-based bonuses. Any bonuses are of a discretionary nature only and as a family-run business, this usually results in a once-off bonus given to all staff members at Christmas for the key roles the whole team plays in looking after our clients.
We Encourage Your Feedback
Transparency is important to us. Should you require any information on advice you have received from us, including the research conducted in making our recommendations, we are more than happy to provide it to you.
We also want to encourage you to take this opportunity to ask us any questions about the Royal Commission findings, provide us with any feedback or if you have received advice from any of the banks or institutions highlighted in the Royal Commission and want to discuss your current setup please submit a request or call us on 02 9633 5530.