Future Planners News

What is the difference between non-aligned and aligned financial planners?

Wednesday, January 28, 2015

Looking for more information? Click here to read the ten questions to ask when choosing between an aligned or a non-aligned financial adviser.

In this video, Steve and Dianne discuss the advantages of non-aligned financial planners and how they differ to aligned financial planners. You can find out all you need to know about non-aligned and aligned financial planners by watching the video or reading the transcription below.

Steven: Well a non-aligned financial planner is a financial planning firm or single adviser that isn't beholden to any other larger institutions or fund managers. Generally, they run their own business and they're not influenced in any way to push a particular product or platform. They're independent.

Di: An aligned financial planner on the other hand is one who is generally employed or is responsible to one of the large industry players, whether it be one of the banks or a large insurance company. Many of those will have dealers licenses and under those dealers licenses will have a large number of advisers operating under them. They also have generally a product range and those advisers are either required or encouraged to use that product range in the solutions that they use for the clients that they see.

Steven: There's several ways that advisers can be paid, whether aligned or non-aligned. Some advisers get paid by the fund manager or by the product provider. But generally, a non-aligned adviser is paid by the client. And that's the crucial difference, because that way all the incentive to push a product or push a particular way is eliminated. And so that's a very important point.

Di: Having the wrong product can mean that you end up with an unwanted outcome. It may be that the product is much more aggressive and takes a lot more risk than you are willing to take.

Steven: There's probably only 10-15% of advisers are non-aligned. The majority are owned or have an influence by the major institutions or the banks.

Di: Well, I think the benefit to the client is that they are consulting with a planner who is not obliged to use a particular product range. We see many clients for whom we use no product. We simply provide advice for them and strategies that they can use to help them solve a particular financial problem. For many advisers, if they didn't use a product in the advice they gave, and the solutions they used, they wouldn't be paid. And for us we operate in a very different way. It's all about finding the right strategies.