Independent Financial advice is best tailored to the clients needs, as they do not receive commissions for products they recommend and are not obligated to offer an in-house product as they are not linked to any product provider.  There are no conflicts of interest when offering the best advice to a client.

In the ASIC Report 413, it was found that receiving incentives (i.e. commissions), therefore non-independent advice, directly affected the quality of advice consumers receive.  Data collected from insurers reflected that on average, 82% of advisers are remunerated under upfront commission models.  Furthermore, ASIC's report revealed that there was a direct correlation between upfront commission models and advice that fails to comply with the law.  When it comes to financial advice, almost all issues are caused by commission and product sales, not strategy. 

Of the 202 samples used in the ASIC report, it was found that where an adviser was paid according to an upfront commission model, the fail rate was 45%.  It was found that when an adviser was paid under an alternative remuneration structure, the pass rate was 93%.  This indicates the impact of conflict of interest on the quality of advice given to a client is significantly higher when the adviser is receiving upfront commissions.

The recommendation of in-house products, over a more suitable option is endemic in the Financial Planning industry. Roy Morgan Research surveys found that, in the four years from July 2007 to June 2011, the six largest institutionally owned advice groups (non-independent) had directed 73% of superannuation recommendations to their own products, despite if it were the most appropriate advice for the clients.

Independent financial advice is not influenced by these factors, as they do not receive a commission, and are not owned or controlled by a larger organisation.  They do not experience conflicts of interest.  All Independent Financial Planners have signed the Declaration of Independence.

Extra information can be found at: ASIC Report 413