Someone said to me recently, ‘if you want to understand employee behaviour, understand how they are remunerated’.  It was a discussion about ethical behaviour in the workplace and I believe it has significant relevance to what is being highlighted in the current Royal Commission into Banking and Finance.  The ‘sales’ culture in banks and the payment of bonuses based on ‘sales targets’ promotes behaviour that is not, in my opinion, consistent with the concept of acting in the ‘client’s best interest’.

Australian Private Capital’s remuneration policy has always been structured to encourage our team to deliver to our published client service standards. Our team are all salaried and have no individual ‘sales’ targets for which they are measured against.  Their personal performance review includes measurements such as the scores our clients provide APC in our regular client survey as well as specific activity KPIs that relate to their role and how they help deliver on our ‘client first philosophy’. The team’s internal KPI’s unambiguously promote APC’s expectation that everyone performs an important role in the overall delivery of timely, accurate, conflict of interest free and highly personal financial advice.

Conflicts of Interest

Recently, APC produced an Adviser_Q_and_A document to help individuals who were considering working with an adviser. It highlights what some of the questions they should ask are, if they wanted to understand where (if any) conflicts of interest existed.  I attach this for your information and would encourage you to read it. I would also encourage you to give it to anyone you know who is considering obtaining advice or developing a long-term relationship with an adviser.

Also attached is the advertisement as part of our 2017 Principal Partnership of the MBS Dean’s Leaders Forum.  It controversially was entitled ‘Does Conflict Free Advice Really Exist?’.  The answer is YES but it is rare.


Unlike many, over the years APC has successfully removed nearly all of the embedded commissions from our implementation solutions.  We have done so by using where possible wholesale offerings, which unlike their retail cousins, have no adviser commissions included.

Where this is not possible, APC’s Commission rebate policy ensures that any commission received is returned to our clients 100%.  Australian Private Capital will this year in July once again return commissions received from insurance companies and banks over the financial year, to our clients.  It is anticipated that the cumulative value of our policy will exceed $750,000 of rebated commission this year. 

For our clients it lowers the cost of personal insurance by approximately 30% per annum.   Importantly it ensures that our clients have no more insurance than their strategy requires at any given time. Our commission rebate policy also lowers the cost of borrowed funds.

A final word

As like many, I look at the findings of this ongoing Royal Commission with some disbelief.   The lengths to which large and some not so large companies have gone to place their interest ahead of their client’s is disappointing to say the least. It reinforces in my mind the validity of the decisions Australian Private Capital took many years ago to be ‘ahead of the curve’ when it came to removing any possibility of conflicts of interest in the delivery of personal advice in Australia.

We continue to look at ways to further enhance our implementation solutions and this remains an ongoing theme at APC.  There are several projects underway with this in mind and over the course of the coming months you will see these come to fruition when you are in our offices for your next Regular Planning Meeting. However underpinning them all is our central commitment to delivering timely, accurate, conflict of interest free and highly personal financial advice to you.

My warm regards,

Robert Sarafov

Director – Australian Private Capital