A conflict of interest can make it harder to give you fair, unbiased advice. The law requires us to manage conflicts and to be open with you about them. This page summarises how we do that, in line with our board-approved conflict of interest management policy, which has the details.
What is a conflict of interest?
It’s any situation where we, or one of our planners, have an interest that could:
- influence how objectively we act for you; or
- stop us from giving you fair, unbiased advice in your interest.
The interest could be:
- financial, such as commission, a fee or a gift;
- an ownership interest, such as shares in a company whose products we advise on; or
- a relationship with someone else, such as a product supplier.
Here are some examples of where conflicts can arise in a financial planning firm:
- Commission differs between products and insurers, so one recommendation could earn us more than another.
- The way you pay for advice, by fee or through commission, can change how much we earn.
- A product supplier offers gifts, hospitality or invitations to events.
- We have an agreement, accreditation or referral arrangement with another business.
What the law requires of us
Sections 3 and 3A of the FAIS General Code of Conduct require us to:
- avoid conflicts of interest and, where that isn’t possible, reduce (mitigate) them;
- tell you in writing, at the earliest reasonable opportunity, about any conflict that affects you, including:
- what we’re doing to avoid or reduce it;
- any ownership interest or financial interest we or our planners may receive, other than an immaterial one (see below); and
- the nature of any relationship or arrangement with someone else that creates the conflict;
- tell you about our conflict of interest management policy and how to get it; and
- have a written policy that our board approves. We must monitor it, review it every year and make it public.
How we identify conflicts
Our policy covers the areas where conflicts usually arise:
- how our business and our planners are paid;
- gifts, hospitality and other benefits offered to us;
- our agreements and relationships with product suppliers and other businesses;
- ownership interests between us and other businesses, in either direction; and
- personal relationships that could affect advice.
Each of our planners declares any interest that could create a conflict, and we record conflicts in a register.
How we avoid or reduce conflicts
- Advice based on your needs. Before we recommend anything, we must understand your needs, finances and attitude to risk. We then record why a product suits you.
- Choosing objectively. Where our licence and agreements let us choose between product suppliers, we must judge objectively, in your interest.
- How our planners are paid. We may not pay our planners incentives based only on how much business they bring in. We may also not reward them for favouring a particular product supplier or product.
- Gifts and hospitality. We may accept only immaterial gifts and hospitality, within the limit set by law (see below).
- Training and oversight. Our team is trained on the policy. We monitor it and review it every year. Our compliance officer reports on it to the FSCA.
- When a conflict can’t be avoided, we tell you about it in writing before you decide, so you can take it into account.
Our planners are paid by commission.
Payments and benefits we may receive
Section 3A of the General Code of Conduct lists the only financial interests that we and our planners may receive from, or offer to, anyone else:
| Type of payment or benefit | What it means |
|---|---|
| Commission on insurance | Commission from insurers, within the maximums set under the Long-term Insurance Act and the Short-term Insurance Act |
| Commission from medical schemes | Paid by the medical scheme, within the maximum set under the Medical Schemes Act |
| Fees allowed under insurance and medical schemes law | Fees that those Acts specifically allow |
| Fees you agree to | Fees for our services where no commission or fee under those Acts is paid. You agree in writing to the amount, how often it’s paid, how it’s paid, who receives it and what we do for it. You can stop the fee at any time |
| Fees for services to someone else | Fees or payment for a service we provide to a third party |
| Immaterial financial interests | Gifts, hospitality and similar benefits worth up to R1,000 in total in a calendar year from the same third party |
| Other benefits we pay for | Anything else, but only if we pay a fair value for it when we receive it |
Other rules also apply:
- Fees, other than commission, must be reasonable for the work done. They must not pay us twice for the same work, or get in the way of fair outcomes for you.
- As a Category I provider that gives advice, we may not receive a sign-on bonus from anyone.
What we receive
- Commission from product suppliers, such as insurers and medical schemes, within the legal maximums.
- Fees that you agree to in writing.
- A rebate from Momentum Wealth International on some of the funds our clients hold with them. It’s a fee-sharing arrangement of between 0.13% and 0.50% of the amount in the fund, and it doesn’t change the fees you pay.
We receive no other payments or benefits.
Ownership interests and relationships
Our policy must list our associates. It must also list any businesses we own part of, and anyone who owns part of us, with the nature and size of each ownership interest.
Relationships you should know about:
- NorthStar Asset Management. Steven Ikin, our Managing Director, also works part-time as NorthStar’s National Sales Manager. The Romulan Trust, which has Steven Ikin as one of its beneficiaries, owns 9.8% of NorthStar’s shares. NorthStar is one of the product suppliers we use.
- Insurers. Finplanning isn’t an associated company of any insurer.
- PPS. Some of our planners are licensed representatives of PPS (Professional Provident Society).
Finplanning has no associates. It holds no ownership interest in any other business, and no other business holds an ownership interest in Finplanning.
We have no referral arrangements, and we receive no payment or other benefit for referring clients to anyone, including the attorneys we work with.
Our FAIS disclosures page covers two more points. It says whether we hold more than 10% of a product supplier’s shares. It also says whether more than 30% of our total earnings, including commission, came from one product supplier in the past 12 months.
How to get our full policy
The law requires us to publish our policy and keep it easy to access.
To get a copy, ask your planner or email administration@finplanning.com.
You can also ask your planner for a copy, or email administration@finplanning.com.
Sources
- General Code of Conduct for Authorised Financial Services Providers and Representatives, consolidated to June 2020: section 1 (definitions of “conflict of interest” and “immaterial financial interest”), sections 3, 3A, 4(3) and 8