It’s no secret that the world of banking is a dangerous place.
In the past decade, we’ve seen the spread of new technology, the rise of digital currencies, the introduction of virtual currencies and even a cyberattack that took down several major financial institutions.
These are just some of the problems facing banks, and the latest is that there are a growing number of financial advisers who have gone rogue and started charging their clients a fee for consulting work that, in some cases, they may have done in their private capacity.
In fact, many financial advisors are charging clients for advice they didn’t even have to do, according to a new report by the Financial Services Information Sharing and Analysis Centre (FSISAC), a UK-based organisation that tracks financial data.
While some financial advisors may not have violated the Financial Conduct Authority’s guidelines for self-employment, there are growing concerns that they’re making money off of customers by charging them fees for advice that could have been given in their own private capacity, according, according the Financial Times.
And, in many cases, there’s no regulation to prevent it.
“We have a duty to act responsibly and to be transparent about the advice we provide and to ensure that clients are not being misled,” said Dr. Robert J. Martin, FSISAC’s chairman and CEO.
“When you charge clients fees for financial advice that you never did give, you are making money for your clients.”
The report, titled “The Financial Industry: A Complicated and Dangerous Sector,” was commissioned by the Federation of Financial Institutions (FFI) to raise awareness about the financial sector’s growing use of self-employed financial advisors, who charge clients up to $500 per hour for their services.
“Financial advice is now often in the hands of advisors who are in a very precarious position, often on the brink of bankruptcy,” said Martin.
“Many advisers are charging a fee in excess of $500 for a single financial advice session.
This means that these advisors are being paid to act on behalf of clients and that’s the most unethical thing we can imagine.”
The financial industry’s increasing reliance on self-financing means the financial services industry is increasingly becoming a cash cow for selfless advisers.
Financial advisers in this sector can make millions of dollars from a client’s hard-earned money, but the most lucrative parts of the financial advice business are also being made on a daily basis.
Martin said that the financial industry needs to get its act together and take better control of its finances.
“The financial industry should be a lot more accountable,” Martin said.
“It’s a money-laundering and tax evasion industry.
There is a lot of money flowing through the industry.”
Financial advisers also use a lot less of their time working in a financial centre than their counterparts in the traditional banking sector.
Martin cited research that shows financial advisers spend around 80 per cent of their hours in a bank or a branch office, with the remainder working from home.
“In terms of time spent working, financial advisers are spending an average of 8.4 hours per day, compared to around 11.5 hours for the average banking adviser,” Martin wrote in the report.
“While this is higher than the banking sector, it is still below the banking equivalent in terms of productivity and efficiency.”
Financial advisors are not the only financial services professionals that are making a profit off of their clients.
The report also found that there were more than 1,000 financial advisers in Britain who were making more than $1 million a year, and that some of them were earning millions from the advice they provide.
Financial advisors earn up to a quarter of a million a month, according Martin.
Martin believes that the sector needs to focus more on educating its clients about the risks and risks that self-investment can pose.
“I think that’s a big thing, the risk-based mindset that people have about their investment,” he said.
Martin also believes that there needs to be greater regulation around the financial advisers that are charging customers for advice.
“There are a number of things that we should be doing that are in the best interests of the industry and not just for the financial institutions,” Martin added.
“If we’re doing everything right, then the industry can be a really safe, secure place.”
But the financial adviser industry is not alone.
There are many other financial services providers that are actively charging customers fees for their advice.
Martin noted that the industry is in a unique position to make money, since most of its clients have limited or no means of retirement, so they need to make ends meet.
“As a financial adviser, I can’t afford to lose money,” Martin told Al Jazeera.
“So, I’m not going to be able to put all my money into this industry, but I would love to help out.”