You may have heard of adviser representatives use the term “Independent”, but you probably do not have the full insight to this term as it gets increasingly thrown around rather loosely. It is interesting to observe truly objective representatives do not profess to be independent. So let us start from the top, slowly peel the layers into the core and cry as we do like as if peeling an onion.
First you have the Act itself and here we are talking about the Financial Advisers Act, from which regulations (force of law) are derived. Then there are directions, notices and guidelines. Contravening regulations attract penalties whereas contravening guidelines does not. However, that said, flouting guidelines impacts MAS’ overall risk assessment of that institution or person.
21-(1)-(i),(ii),(iii) are very crystal clear. At this stage, we are talking about regulations.
I may be so bold to dare say that even a 100% fee based advisory business model can run the risk of flouting this regulation. What more, the alternatives.
The guidelines did indicate that receiving commissions does not prevent one from using the term independent. The final statement in Guideline No.FAA-G05 states,”It is a matter for the financial adviser to be clearly satisfied and be able to demonstrate that it is in compliance with regulation 21 of the Financial Advisers Act (FAR) before using the term “independent”.
At this moment the term “independent” is a self professed thing. It brought me to think of Bleach Anime’s Ganju Shiba character whose titles are all self professed. And it has been also said that self praise is no praise. With the breath of products available to me and the multiple licences for various financial services that I have, I dare not profess to be independent. Now you know why.