“Are you independent?” often produces a label. “How would your pay change if I chose another option or did nothing?” reveals more.
Every advice model contains incentives. Payment may come from a planning fee, percentage of assets, product commission, salary, referral arrangement or a combination. Ownership and provider relationships can also influence which options are familiar or available.
An incentive is not automatically wrongdoing. Professionals must be paid, and expertise or service has value. The important question is whether the influence is disclosed and managed so that the recommendation still rests on your needs.
Take these questions
- Who pays you for this recommendation and how much?
- Would your remuneration differ across the main alternatives?
- Does your firm own, distribute or receive benefits from any provider involved?
- Are there referral fees or sales targets?
- How is the conflict managed and recorded?
Try this now
Locate the conflict-of-interest and remuneration disclosures. Compare the written relationships with the parties named in the proposal.
A transparent incentive can be assessed. An invisible one cannot. The aim is an informed relationship, not an assumption that payment makes advice impure.