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End of the dinosaurs

Around 66 million years ago, a huge asteroid crashed into modern day Mexico.  The impact reverberated around the world with shockwaves equivalent to a Magnitude 9 earthquake.  It threw up so much soot and dust that it covered the entire surface of the Earth for more than a decade.   

Three quarters of all plant and animal life died out, including all land-based animals weighing more than 25 kilograms.  For the dinosaurs it was an extinction event.  But not everything died.  Some species were able to adapt to the changed environment and within 30,000 years, life on Earth was thriving once again.


Extinction event for some financial advisers

Like the dinosaurs all those years ago, Australian financial advisers are also facing an extinction event.  More than one-quarter of financial advisers have left the industry in the past two years.  

But for advisers, the danger is not coming from outer space, it’s right here with us.  Advisers are finding themselves out of step with their communities.  And unlike the dinosaurs, who were given no warning when the asteroid hit, there have been plenty of signals.   

The expectations we hold of financial advisers have changed.  Advising people on their life savings comes with a lot of responsibility.  And over the past ten years or so there have been a number of product and advice failures that have had devastating consequences on Australians and their families.


Changing community expectations

CoreData research shows that the community now expects a higher level of professionalism.  They want advisers to be educated, holding at least a bachelor’s degree like accountants and lawyers.  They expect financial advisers to serve their clients and no-one else. Not the financial companies who pay their commissions and not the financial institutions who employ them.

The community expects advisers to be paid only by their clients and only for the advice that they give.  They want to see an end to the system of money flows that bias the advice.  

And clients care about the fees they pay.  They also care about how their fees are calculated. They prefer to pay agreed fees that are fixed, not fees calculated as a percentage of the size of their investments. 

Unfortunately, some advisers are not adapting and still fall well short of community expectations.  There are still advisers being paid commissions by product providers or charging asset-based fees.  Asset-based fees have the potential to bias the advice, especially if the fee is calculated only on particular types of investment, like super.


A new breed of adviser

The good news is, most advisers are up to the challenge. An increasing number of advisers are choosing to leave the big institutions and work in less conflicted ways. 

Most advisers no longer accept commissions and have transitioned away from asset-based fees.  They’re studying as well.  They want to earn their degrees before the end of 2026, when having a degree will become a legal requirement.


At When Financial Solutions, we are self-employed advisers who are not aligned with any financial institutions or super funds who want us to push their in-house products.  You don’t need to change your investments just to deal with us.  We can advise on a wide-range of investment products, including your existing investments.

And we are paid only by our clients and only for the advice that we give.  Our fees are clear, transparent and fixed, so there are no surprises.  We receive no commissions, asset-based fees, or any other payments related to product sales.  And we have already earned our degrees, so we’ve met the new education requirements.

That’s why with When Financial Solutions it’s not a matter of ‘if’ you will receive advice in your best interests, but ‘when’. 


Michael Bowman and James McMaster are co-founders of When Financial Solutions.  This article is general and does not consider your personal circumstances.  If you would like advice specific to you please give us a call.


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