Catherine Child.9 June 2020

Why independent financial advice often isn’t independent

If you’ve been in this industry as long as we have, you’ll know that a common problem clients are faced with in the wealth management arena is the lack of authentic independent investment advice: Financial advisors that work for the bigger Private Banks or Wealth Managers often manufacture and sell their own financial products, and Independent Financial Advisors (IFA) that are supposedly “independent” can also be linked back to product providers.

If you’ve been in this industry as long as we have, you’ll know that a common problem clients are faced with in the wealth management arena is the lack of authentic independent investment advice: Financial advisors that work for the bigger Private Banks or Wealth Managers often manufacture and sell their own financial products, and Independent Financial Advisors (IFA) that are supposedly “independent” can also be linked back to product providers.

Advice should go two-ways. Advisors should give their expert recommendations and guidance on where to invest the money, and the advisee should be able to make a choice based on the information received. However, when this advice becomes obscured by external forces and motives, you can question whether the outcome was really a choice for the advisee in the first place.

In research conducted by ARQ, we found out that more than 1 in 2 clients feel concerned that they’re not being shown the bigger picture when it comes to their investment options. If this is the case, it’s quite likely their investment portfolios are not personalised towards their investment goals.

The simple truth is that many advisors, especially those working in big corporations push certain products to investors on which they may earn a commission on – even if those financial products do not best suit the investor. Sometimes, they even limit the investor options. This unfortunately works against the investor –  investors can only see and select the best products when they have unlimited options to choose from.  

Financial advisors may not be thinking with the client’s best investment interests at heart.

What does this mean in the long run for both clients and advisors?

Well, for starters there may be a conflict of interest between the client and financial advisor. You may wish to increase your assets to achieve your financial goals however, your advisor needs to use the assets to produce personal income. In the long run, this leads to mistrust and insecurity between advisor and advisee – something the relationship might struggle to recover from.

To ensure you and your financial advisor do not have a conflict in interest, your advisor must be fully transparent in their investment advice and strategies. Communication here is key, as understanding one another and ensuring your interests are aligned is the path to success.

If you are feeling alienated, ARQ can help you know where you stand, as well as guide you to where you should be going. We do this by watching over your investments, and benchmarking them against others.

We believe that trust is the foundation of any relationship. That’s why we built ARQ as a tool that can be trusted with transparency, as a way to leverage your relationship with your advisor and cement trust – ensuring you and your financial advisor are fully aligned.

 ARQ is entirely independent – that means we can show you the full investment opportunities available to you. And when you do choose the best products for you – we make absolutely no commissions. This means, we really do have your best interests in mind, and are always on your side.

If you’ve been in this industry as long as we have, you’ll know that a common problem clients are faced with in the wealth management arena is the lack of authentic independent investment advice: Financial advisors that work for the bigger Private Banks or Wealth Managers often manufacture and sell their own financial products, and Independent Financial Advisors (IFA) that are supposedly “independent” can also be linked back to product providers.