There is not enough detail about the annual opt in reform to take a stand for or against it, although it may be appropriate for ‘inactive’ clients, according to the Boutique Financial Planning Principals Group (BFPPG).
BFPPG president Claude Santucci said the association came to the decision that it could not yet take a stance regarding the Future of Financial Advice reform proposal following discussions at its recent conference, noting that even Treasury is seeking feedback from financial planners.
“Until there is clarification of some key points, the BFPPG is unable to either strongly support or oppose the idea of ‘opt-in’,” Santucci said.
However, he stated that BFPPG is in favour of an ‘opt out’ arrangement, asserting that there was a “redundancy” in requiring clients that have an ongoing relationship with their financial planners under a comprehensive client service agreement to then have to complete separate paperwork on an annual basis “to merely reconfirm their existing arrangements”.
Santucci said there was also concern that the ‘opt in’ administration costs would be passed onto clients, and that a delay in opting in might cause the client to suffer financially and might also impact on the client’s and the financial planner’s legal positions.
“We recognise that after 2012 new clients will all be fee-based and therefore will have the ability to opt out at any time, removing the need for any opt-in arrangements,” Santucci said.
He added the BFPPG is in favour of some form of opt-in arrangement where there is no client service agreement, which would stop passive income streams unrelated to the provision of advice.
