Why is “Independence” Important?
The terms “unbiased”, “impartial” bring with them the obligation to manage any potential conflicts of interest which may come from obligations to or payment from a party other than a client.
Strategic is not just unbiased and not just impartial. We are independent. We have no obligations to or payment from any party other than our client. This means we have no conflict of interest to be managed.
The recent changes to the legislation and regulation of Financial Advisers place a high standard on the use of the term “independent”. Strategic has reviewed all its practices to ensure they meet this new standard. This is the goal Strategic has been working towards for many years and applaud the market changes that allow this.
Here is the Standard and how we comply.
The following is the section of the Code of Professional Conduct for Authorised Financial Advisers relating to “Independence” and our commentary in Blue
Code Standard 3
An Authorised Financial Adviser must not state or imply that the Authorised Financial Adviser is independent, or that any financial adviser services provided are independent, if a reasonable person in the position of a client would consider that the Authorised Financial Adviser or the services provided are not independent.
The following are examples of circumstances where neither the AFA nor the AFA’s provision of financial adviser services may be described as “independent”
- (a) a related person of the AFA, or a related person of the AFA’s employer, or principal, is the product provider of a financial product relevant to the financial adviser service provided; or
We have No vested interest in any provider of products.
- (b) the AFA is subject to a contractual obligation to:
· recommend a particular financial product or financial products; or
· limit the AFA’s recommendations or discretionary investment management services to a particular financial product or financial products; or
· attain or maintain a target in relation to a particular financial product or financial products.
SFP Ltd has No contractual obligations, No limitation to advice, No targets related to specific product sales.
However, the contractual obligations falling within this paragraph (b) do not include the use of wrap account services, platforms, or other portfolio administrative or custodial services, where the use of such services and the arrangements the AFA is able to put in place for the AFA’s clients permit access to a wide range of financial products and product providers; or
SFP Ltd does not use a wrap account, rather we use a variety of administrative systems which provides a very wide range of product solutions.
- (c) the AFA or a related person of the AFA will or may directly or indirectly receive a benefit from a person other than the client for providing the services or from the client’s acquisition of a financial product or products.
However, for the purposes of this paragraph (c) the following benefits do not affect an AFA’s ability to describe the AFA or the AFA’s services as independent:
· those that are paid, credited, or transferred to the client; and
Any benefits received are credited to the clients account. For Strategic this embraces fee only insurance.
· those that are remote or insignificant; and
· those that are received by the AFA in the form of salary or wages as an employee, or in the form of fees as a contractor, that are not determined in whole or in part by reference to volume or other targets relating to a particular financial product or product provider.
Any Strategic AFA must function free from product incentives.
An AFA must not state or imply that a researcher or other third party service provider used by the AFA in relation to the AFA’s financial adviser services is independent unless the AFA has reasonable grounds to believe the third party would be able to describe themselves as independent under this Code Standard, if the third party were an AFA.
All Research resources (several are used) are assumed to have possibility of a bias hence several are used and are supplemented by our in house experience and judgment. We believe, from experience, a healthy cynicism is important.