Does your AFSL have your back?

Is your AFSL constantly looking to cover its own backside at your expense, lecturing you about how to run your business (or worse, putting obstacles in your way to cover itself)?

The biggest opportunity in financial planning in over 30 years is upon us. Is your AFSL helping you take full advantage…or slowing you down?

Part 1: The Why

Part 2: The What

Part 3: The How

Part 4: The When

Independent Financial Advisors Australia
The biggest opportunity in financial planning in over 30 years is upon us. Is your AFSL helping you take full advantage … or slowing you down?

Does your AFSL permit you to be independent?

Earlier this year the government released a Law that you as a financial planner must declare to your client – in writing – whether you meet the legal test of independence and, if not, to explain why not.

Independence test #1

Is your AFSL is aligned with a bank, fund manager or insurance company? If this is you then you might have experienced the manager who seems to think you exist to force product down your clients’ throat, and you’ve grown tired of having your integrity constantly put under that pressure.

Independence test #2

Is your AFSL not aligned with a product provider, but you can’t call yourself independent because your AFSL still allows at least one adviser under the license to pocket commissions or charge asset fees? If that’s you then you might be familiar with the anxiety that sooner or later one of those advisers is going to drag the AFSL into a scandal and your reputation will be dragged in with it.

Are you swimming upstream?

Partnership with the right AFSL can make all the difference between having the wind at your back or swimming against the current.

We have distilled a few key lessons we’ve learned, crafted out of painful mistakes and hard-won experience, intended for a very specific purpose:

To help you build the financial planning practice you’ve always wanted. Starting now.

Use it as something of a roadmap – what follows is the ‘why’, the ‘what’ and ‘how’ of independent financial planning.

The Roadmap

Part One: the why …

• What is an IFA?
• Why become an IFA?
• Exploding the myths around becoming an IFA.

Part Two: the what …

• What will your independent practice look like?
• What service do I do as an IFA?
• How do I articulate the value I provide?
• How do I price that service?

Part three: the how …

• There are three pathways – which is right for you?
• How your AFSL can help you or hinder you

Part Four: the when …

• Getting started – first steps
• Getting support from people who believe what you believe

Comfortable? Let’s go!

Part 1: The Why
Do these words sound like yours?


“I can’t offer the type of advice I really want to give where I am.”


“I feel like a salesperson.”


“It doesn’t feel like I’m really delivering value – it’s a bit like I’m charging $3000 for an annual cup of coffee, to roll out cookie-cutter advice.”


“I don’t know when’s the right time, and whether or not I should set up my own AFSL.”

Financial professionals act in the interests of their clients. That’s the gig you signed up for and it’s how you practice every single day you come to work. But the public doesn’t recognise you for it.

Why not?

Because they’re so battered and bruised from scandals you had nothing to do with. Face it, the client ‘trust rating’ of financial professionals is at an all-time low.

Why does the public want independent advice?

A little while ago a not-for-profit public company called the Profession of Independent Financial Advisers surveyed consumers aged 40 to 55yo on what appeals about independent financial advice.

You can actually download your own copy right here:

More than three-quarters said they want their adviser to be genuinely independent.

Even more said they’d value an ongoing relationship with an adviser like that.

This explains why – these quotes are taken from live interviews with new prospects …


“My adviser is a nice person and I like him, but I need someone who’s impartial.”


“My bankie can’t advise me, all she can do is sell me things.”


“I need a second opinion on my adviser’s advice from someone who’s independent.”

You do a good job and always act in the interests of your client yet you are being tarred with the same brush as the product-floggers.

Why are more and more advisers asking the question?

The two biggest reasons we hear that advisers — aligned and non-aligned alike – are reconsidering their careers is because they aren’t feeling professionally satisfied with their current AFSL, and that they feel like they’re just producing advice designed to cover the AFSL’s backside …


They want to make a difference, while building something they actually own.


Although they act with integrity every day, often they don’t get the credit for it and sometimes even have to justify their advice.


They want more fulfilment and professional satisfaction.


They can see the writing on the wall and don’t want to become a dinosaur.

A dinosaur? Surely that’s a bit harsh! No, the fact is there’s a worldwide move in the developed nations towards a model of independence in financial advice.


In Canada legislation has been in place since 2016 in response to concerns around the unclear and incomplete disclosures that were being made, mainly around remuneration. They call it “Client Relationship Model” and it’s designed to ‘out’ conflicts of interest.


The following year the USA drafted a new regime called “Fiduciary Standard”. Under this standard, in order for an intermediary to accept a commission, the client needs to sign a ‘best interest contract exemption’ … an you imagine the conversation you’d have to have with a client where you want them to sign a form called ‘best interest exemption’? This law has evolved further since but parts of it are still alive and well in a 5-part ‘Fiduciary Test’.


Over in the UK commissions have effectively been banned for years now. The Retail Distribution Review required that advisers declare their advice to be either being ‘restricted’ or ‘independent’. The laws says that in order to call yourself an independent financial adviser, you need to provide “unbiased and unrestricted advice” based on a “comprehensive and fair analysis of the market”.

Independence = trustworthy

As financial planners, we realise that the word ‘independence’ is solid gold commercially because it’s synonymous with trust.

Whenever a public scandal is to be investigated, invariably an independent inquiry or an independent commission is set up to do the sleuthing. Why? Because if it’s independent we can rely on there being a strong process, that we’ll get to the bottom of the matter, as ugly as it might be, and that the truth will be outed, with neither fear nor favour.

‘Independent’ means ‘trustworthy’.

The bottom line is that advisers feel that something is missing, they’re not happy with the status quo and, what’s more, they’ve been feeling this way for a while. One easy-to-identify missing ingredient is that they want to be able to call themselves genuinely independent and they can’t do that with their current AFSL.

The demand for independence

There are so many myths floating around about becoming an Independent Financial Adviser (IFA), mostly to do with whether the model is financially viable.

In-house members surveys conducted by the Profession of Independent Financial Advisers have shown that there is a very healthy supply of unsolicited enquiries from Google searches for independent financial advice. Members report an average number of leads between 3 and 12 per month, completely unsolicited.

Imagine that – calls out of the blue from people ready to do business and expecting to pay a fee for your advice. Sounds fanciful?

Call any adviser in that association’s member directory, you’ll find it here:

What does independence actually mean?

A few years ago Roy Morgan Research surveyed 40,000 people on the perceived independence of their financial planner. The survey showed that a disturbing number are totally confused on the subject. But as it turns out, many financial planners are confused on the subject too…

“XYZ Financial Planning is truly independent in the sense that we have no institutional shareholders and no investors such as banks or investment groups. Independence means no product of our own.”

Exactly when are we able to use this word and others just like it, such as ‘impartial’ or ‘unbiased’? Just because your business card doesn’t display the logo of a bank or insurance company doesn’t mean you can use the term ‘independent’ to describe your services …

Independence Law #1
Section 923A of the Corporations Act says that to use the term ‘independent’, ‘unbiased’, or ‘impartial’ to describe our services, as financial advisers we …

Must not receive commissions [s923A(2)(a)(i)]


Must not receive asset fees [s923A(2)(a)(ii)]


Must not accept gifts from a product issuer that might influence them [s923A(2)(a)(iii)]

“Why not? What’s wrong with gifts, commissions, and asset fees?”

They’re incentives to sell something.

“But surely asset fees are alright – they’re just fees for service charged as a percentage of assets under advice.”

What if real estate agents started calling their sales commission a ‘fee for service’?

After all, it’s certainly a fee they earn for a service they perform. The trouble is the new name ceases to describe the true nature of the payment. It’s still an incentive. Incentives are the working tools of product manufacturers and their salespeople, not advisers.

Here’s another example: ‘health management’, the equivalent of ‘wealth management’ but in the weight loss industry. Interestingly, the way they get paid – their ‘fee for service’ – is a percentage of how much you spend on the supplements and other products they recommend. Sends a pretty clear message about whether you’re going to get impartial advice about their pills and potions, doesn’t it?

An asset fee is an incentive and incentives are what salespeople receive to sell phone plans and gym memberships. Incentives have no place in the world of professional financial advice.

Imagine if your doctor didn’t charge you a consult fee, instead she pocketed a share of whatever pills she prescribed!

Independence Law #2

Section 923A, goes further than just incentives, though. It says that the individual adviser is deemed to be in breach if his or her AFSL permits any other representatives to pocket incentives [s923A(2)(b)].


When we give advice we do so basically as agents of our AFSL. The party responsible for the individual planner’s conduct is the AFSL therefore if it allows incentives then the individual may too, whether or not they choose to.

This means that if your AFSL allows any adviser under the license to receive commissions or charge asset fees then nobody at all can call themselves independent, even if – as an individual – they don’t.

Independence Law #3

But the Independence Law goes further still. Financial advisers …

Must not have any additional product restrictions imposed on them by their Licensee [s923A(2)(d)]


Must not have any association with either a financial product or a financial product issuer [s923A(2)(e)]

“Why not?”

To be independent is to have professional freedom within the bounds of the law, and limitations result in dependence, not independence.

Insofar as the law is concerned, the effect of Section 923A’s rules entitles the public to a high level of confidence that their adviser is free from any conflicts of interest that really matter.

Objections to the Independence Laws

Funnily enough, it’s not the public who’s complaining; just financial planners who don’t satisfy the law. The most common objections from advisers fighting against the change seem to be:


You can’t eliminate all conflicts so it makes no sense to prohibit independently-owned financial planners from using the term (i.e. the ‘throw out the baby with the bathwater’ reaction).


I run my own licence and am not affiliated with a bank or insurance company and therefore I should be able to call myself independent (i.e. the ‘I’m halfway there so spot me the difference’ objection).


Charging asset fees on a wrap platform doesn’t actually breach the law (are you brave enough to test that in the Courts?).


Hardly any financial planners satisfy this law so it should be changed (umm …what?)

At the heart of these objections lies a desire to have one’s cake and eat it too: “I want to be called ‘independent’ but I won’t change my business model to do so”. To put it another way: “I’m not going to step up, you lower the bar”.

Bit harsh? Maybe. The bottom line is this: IF you want to call yourself independent AND you currently don’t satisfy the Independence Law then you have two options. Either …

  1. Change the Law, or
  2. Change your business model.

As for the first option, good luck with that.

As for the second option, the notion of turning independent conjures up a host of imagery and fears – many of them unfounded, you’ll be pleased to hear. The real question is how to actually accomplish independence and the good news is there is now a way.

The first genuinely independent Australian Financial Services Licence of its kind

Become conflict-free by joining the first Community of elite, genuinely Independent Advisers.

Contact us and explain where you’re at. We’ll tell you what you can do and give you a run down on what we see as your options. Have you had enough anxiety about being dragged into scandals you had nothing to do with? The next step is yours …

Independent Financial Advisors Australia

Have Questions?

02) 6162 0492