Home / Uncategorized / What’s in a name? Ask advisers, as they ponder an upgrade

The evolving nature of advisers’ client bases, and the work they do for different parts of those, is leading to title creep. But there is little in the way of official guidance on what titles are appropriate.

What’s in a name? Plenty, it seems, for financial advisers; many of whom have started to call themselves ‘private wealth advisers’ or ‘private wealth managers’, essentially upgrading from ‘financial adviser’ or ‘financial planner’.

And, if they are qualified to use the latter two terms, they can call themselves whatever they like.

“There are definitely rules around what people who are not financial advisers can’t call themselves, but the rules define who can’t call themselves what rather than who can call themselves what,” says Phil Anderson, general manager, policy, advocacy and standards, at the Financial Advice Association of Australia (FAAA).

Under Section 923 C of the Corporations Act, the terms ‘financial adviser’ and ‘financial planner’ are restricted terms; which means that under the AFSL regime, a person must not use the terms ‘financial adviser’, ‘financial planner’ or ‘terms of like import’ unless the person is able under the licensing regime to provide personal financial advice on designated financial products.

If a person satisfies the criteria that enables them to call themselves a ‘financial adviser’ or a ‘financial planner,’ they can choose another title, Anderson says.

“Some of our directors call themselves ‘senior advisers’ or ‘principal adviser,’ and sometimes they will add ‘CEO’ or ‘managing director’ to that. You do see ‘private wealth adviser’ more these days. That has a nice ring to it; to me, it certainly suggests an adviser who’s focused on high-net-wealth clients.”

And that is at the heart of the move to ‘private wealth adviser’ – the increasing segmentation of the Australian market.

“Often the terms ‘financial planner,’ ‘investment adviser,’ ‘financial adviser,’ and ‘private wealth manager or adviser’ are used interchangeably, which no doubt confuses the public,” says Peter Leggett, executive chairman and chief investment officer at Melbourne-based Arrow Private Wealth. “However, I see them broadly representing different roles with distinct areas of focus in financial services. We’re very passionate about describing ourselves as ‘private wealth advisers,’ because that’s what we offer.”

A ‘financial planner’ usually takes a broad, comprehensive approach to managing a client’s finances, says Leggett: their role encompasses multiple aspects of financial life, including retirement planning, estate planning, (some) tax strategies, insurance needs, and budgeting and cash flow management. The financial planner’s primary goal is to create a long-term financial plan tailored to the client’s personal goals and life stages.

An ‘investment adviser,’ he says, will focus more specifically on managing investments. “Their expertise is centred on recommending, buying, and selling (trading) financial securities like shares, bonds, managed funds, and other assets to help clients build and grow their investment portfolios. Their primary goal is typically to optimise the performance of investment portfolios, aligning investment strategies with the client’s risk tolerance, time horizon, and objectives,” Leggett says. “Investment advisers may (or generally) have shorter-term, transaction-focused relationships, but do also manage ongoing portfolio oversight. The better ones are now moving towards broadening their advice and services.”

But a ‘private wealth manager/adviser’ provides “highly personalised and holistic financial services, generally to high-net-worth individuals (HNWIs),” he continues. “Their offerings typically go beyond financial planning and investment advice to include what we call family succession planning, which then leads to estate planning (where you bring the lawyers in), tax optimisation, philanthropy and charitable giving, family governance, and complex investment strategies, often with access to exclusive investment opportunities. In addition, some have recently expanded to include aged care and in-home care advice, along with preparing business-for-sale programs.”

The title you use “should address the market you’re trying to advise,” says Will Douglas, adviser and partner at Koda Capital. “Having worked at Ord Minnett, Merrill Lynch, UBS and now Koda Capital. I’ve gone through a few titles. I’m now set on ‘financial adviser’. To us, ‘financial adviser’ seems to cover-off a lot of different bases.

“At UBS the advisers are ‘private wealth managers’ because they’re dealing with private clients, and it’s more of a ‘private bank’ mentality. At Koda we work with not-for-profit and philanthropy clients, and institutional wealth clients. In that area, calling yourself a ‘private wealth manager’ can pigeonhole you – ‘private’ is considered ‘family’ wealth, and many family offices are, in effect, small institutions.”

Warrnambool-based Bradley Rogers, whose title reads ‘financial planner and business owner at WealthShore’, says the term ‘private wealth adviser’ versus ‘financial adviser’ is “potentially a good way of differentiating wholesale financial advice from retail financial advice”.

“I believe in the profession, and while the amount of money a client has potentially opens up different types of investments and the way that is implemented, advice really is advice,” Rogers says. “It might be more the perception, that the client has lots of money, so the adviser might feel, ‘I need to look like I’m doing something special to make the client feel like they are important,’ when the reality is a standard portfolio may end up with a similar result. But ultimately, what we call ourselves is irrelevant; clients still have basic needs; and ultimately, the client will care about the relationship and trust, not your title.”