EIGHT HARD QUESTIONS
Find your answer
How do you invest my money?
What are your qualifications?
How do you get paid?
Do you accept grandfathered commissions?
Who owns your financial planning business?
Do you recommend your own products?
Why should you be my financial adviser?
How do I know your advice is tailored to my needs?
1. HOW DO YOU INVEST MY MONEY?
Many advisers (or adviser firms) have an investment philosophy that underpins the investments they recommend to meet your needs. Most importantly a clear investment philosophy helps balance the trade-off between risk and return.
WHAT IS PERPETUAL'S INVESTMENT PHILOSOPHY?
Our investment philosophy is to "protect and grow". We're proudly conservative and focus on protecting your capital first. Then on achieving the returns you need to meet your goals.
2. WHAT ARE YOUR QUALIFICATIONS?
Financial advisers need knowledge on everything from investor psychology, to economics, legislation, investment theory and much more. Many advisers have gained this knowledge from years of experience but regulators and clients rightly expect relevant university qualifications and ongoing professional development.
HOW QUALIFIED ARE PERPETUAL ADVISERS?
Perpetual advisers have qualifications (including Masters degrees) in fields like finance, economics and accounting as well as financial planning. Each year Perpetual Private client advisers do at least the amount of annual professional development training recommended by the Financial Planning Association. They also undergo an annual competency test and must comply with Perpetual's Code of Conduct.
3. HOW DO YOU GET PAID?
Across the industry, advisers are paid in various ways – via commissions, asset-based fees, hourly fees etc. The method of payment is very important and so is one simple principle – the adviser must have your best interests at heart.
HOW ARE PERPETUAL ADVISERS REMUNERATED?
As senior employees of Perpetual, our advisers receive a salary as well as short and long-term incentives. Perpetual charges an advice fee based on a percentage of the assets we manage for you. We rebate all fund manager commissions to you and do not accept volume rebates from investment (Wrap) platforms (i.e. rewards for large volumes invested on those platforms).
We do receive commission on insurance products as we believe it can be the most cost-effective way to pay for insurance advice. If we provide additional services (estate planning, managing an estate etc) we charge those separately on a professional fee basis. All fees, charges and potential conflicts of interest are disclosed – all the time.
4. DO YOU ACCEPT GRANDFATHERED COMMISSIONS?
The Future of Financial Advice (FoFA) reforms (2014) banned "conflicted remuneration" - effectively, payments that might influence financial or product choice advice. However, the legislation 'grandfathered' commissions on financial products sold prior to FoFA. In line with recommendations from the Royal Commission into Financial Services, the government has released draft legislation which will end grandfathering from 1 January 2021.
DO PERPETUAL ADVISERS RECEIVE GRANDFATHERED COMMISSION PAYMENTS?
Grandfathered commissions have been a small part of advisers' income in the past. We are now moving to a different business model that will eliminate them over time and in line with the proposed legislation.
5. WHO OWNS YOUR FINANCIAL PLANNING BUSINESS?
Some financial planning practices are independent businesses, others are owned by banks, super funds or investment management firms. The type of ownership may affect the investment, administrative and people resources a financial adviser can put to work for you – and how long the business will be around. You also need to know if the ownership structure might influence the investment products an adviser might choose on your behalf.
WHO OWNS PERPETUAL PRIVATE?
Perpetual Private is part of Perpetual Limited, an Australian company founded in 1886 and listed on the ASX. In addition to financial planning, Perpetual also provides investment management and corporate trustee services.
6. DO YOU RECOMMEND YOUR OWN PRODUCTS?
Many industry super funds, banks and investment managers have divisions that advise on investment choice (financial planning) and divisions that manage investment products (fund managers). You need to understand if your financial planner is advising you to use investment products managed by their company and what underpins that choice.
DO YOUR ADVISERS RECOMMEND PERPETUAL INVESTMENTS' PRODUCTS?
Perpetual advisers can advise on a broad range of products and services. Your adviser will take your personal situation and needs into account and then discuss options with you. The investment options they recommend may include products managed by any of a wide variety of fund managers, funds managed by Perpetual Investments or products issued by Perpetual (but managed by a third-party investment manager). Fund recommendations are always based on your needs.
7. WHY SHOULD YOU BE MY FINANCIAL ADVISER?
Financial planning is personal. You need an adviser who will understand you and your family and has the skills to meet your needs. You want to find an adviser you can trust – because to make advice work you must be honest with each other over a long period of time. It makes sense to compare advisers to find one who suits you.
WHY SHOULD I CHOOSE A PERPETUAL PRIVATE ADVISER?
At Perpetual, we're with you for the long haul. Indeed, we have many family clients who we've helped across multiple generations.
Our heritage as a trustee company means we can offer you a wide range of additional services – including estate planning, tax, accounting and trustee services. That trustee heritage also means we have always sought to act in the best interests of our clients – it's what's called a "fiduciary duty".
We listen first, so we can tailor our services to meet your exact needs. For those interested in doing more with their wealth, our Impact Philanthropy approach can help you make a positive impact on the world. Outside of government, Perpetual, acting for its clients, is the largest distributor of charitable funds in Australia.
8. HOW DO I KNOW YOUR ADVICE IS TAILORED TO MY NEEDS?
Your financial plan must be highly personal. Not just because your situation is unique but because it almost always links to other people - children, siblings, parents, business partners – and to organisations you care about like charities.
HOW DO I KNOW PERPETUAL'S ADVICE IS TAILORED TO MY NEEDS?
Our five-step advice process ensures our advice works for you.
We have a discovery process to assess your financial situation, talk about your goals and to get to know you. We then gather all the required information.
We prepare and implement a strategy that gives you the best chance of achieving those goals (making sure you are happy with the plan and involved all the way).
Finally, we have regular, highly-focused review conversations so our advice evolves as your needs change.
YOUR ADVICE CHECKLIST
By law, advisers have a duty to "know your client".
Ask an adviser these Eight Hard Questions and you'll "know your adviser" much better.
That's why we've produced this simple Eight Hard Questions checklist.
It covers the questions, has some space for you to record the answers and some further tips on choosing an adviser.