Should ASIC provide a templated RoA to reduce advice costs?

The Australian Securities and Investments Commission (ASIC) should provide superannuation funds and advisers with a templated record of advice (RoA) for use to help reduce costs, according to the Association of Superannuation Funds of Australia (ASFA).

A key part of ASFA’s submission to the ASIC affordable advice review has pointed to the cost-saving advantages of using RoAs instead of statements of advice (SoAs) in circumstances where an RoA cost a member somewhere between $300 and $500 and where an SoA cost between $1,500 and $2,500.

In doing so, it suggested the following model:

  • Advice providers can provide a RoA rather than a SoA on a limited number of advice topics, which reflect the most frequently asked questions by members. 
  • ASIC to provide a template RoA for advice that falls under this model to ensure consistency for members’ benefit and to help ensure compliance. 
  • Some of these topics may also be categorised as intra‐fund advice. It will be up to the superannuation fund to decide whether it will be provided as intra‐fund advice or not.  
  • Appropriate records will be kept and provided to members and regulators when required. 
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The ASFA submission suggested that some of the questions that could be answered through an ROA included:

  • Should I stay invested as I am or move my money to a different investment option?
  • My account balance has dropped, what should I do?
  • How do I set up a pension account?
  • Can I claim a tax deduction on my contributions? 
  • How much can I contribute into my superannuation? 
  • How do I withdraw my superannuation under compassionate grounds?

“ASIC could work with industry to design an appropriate RoA advice template,” the submission said. 

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There is no point in this, we all know what an ROA can be used for. The better project would be to show how they arrived at the scope of the ROA, how that meets all regulations including FASEA, and the cost of those investigations and consideration of alternatives - then show me the file notes they would like to see - 1st meeting, strategy alternatives, any further client discussions, the presentation of advice meeting, and the implementation phase - and then tell me it costs $500.

This will not work. ASIC has shown themselves to be totally inept at creating "templated" advice documents of any type.
Each one they have provided in the past have been totally unworkable and focused more on the cost of the advice than the actual advice being provided.

Yes ASIC should provide templates. It won't happen because it will actually require them to do some work, its easier for them to leave it to advisers and licencees to work with unclear direction and ban them later so they can justify their existence.

Ah, the myth of the cheap RoA continues. I'm sure it's better for these big call centres to churn out RoAs instead of SoAs, but to claim that they're the solution to fix the cost of advice ignores just so much of what advisers have to do.

Take the first query they flag: "Should I stay invested as I am or move my money to a different investment option?"

Sure, for a super fund that probably seems simple. Man with a hammer, all that.

But for an adviser, we still need to comply with the Corps Act, FASEA plus licensing requirements.

So that query will require a fact find at least, file notes, at least one meeting, some discussion of their overall wealth - we don't have the luxury of ignoring everything not in their super fund - and an exploration of their tolerance for, and understanding of, investment risk.

Standards 5, 6 and 9 probably suggest at least a cursory review of the fund itself to make sure it remains suitable too - again, we don't have the luxury of limiting our universe of exploration to the one super fund.

Having invested these hours into the process, whether we then use an RoA or SoA to deliver our findings and recommendations doesn't really make as much of a difference as these pundits think it does.

How dare we ask ASIC to do some real work and provide a solution for once.

Unless ASIC, FASEA, and AFCA all agree the whole concept it doomed to failure. Every body has to use the SAME SET OF RULES!

The reality is that the only advisers doing $300 RoAs/SoAs are tied agency Intrafund Personal advisers who are collecting over $100,000 pa (plus $40,000 pa bonsuses) a year, in order to be able to afford to do so. All done under the guise of "free/low cost advice". Meanwhile, not one of the millions of super fund members they are charging ongoing have provided any informed consent or regular Opt-Ins for the ongoing remuneration of these Intrafund advisers. Time to end this racket.

Licensee fees are 40k plus. Even if you saw 80 clients a year for this style of advice at $500 a pop you would be working for free.

Wow. Just wow. The audacity of this submission beggars belief - “ Should I stay invested as I am or move my money to a different investment option?”
Read Standard 6 and then see if this submission holds any water whatsoever. In for a penny in for a pound ASFA, you mention product, asset, fee etc and you’re bound by the code. Get on board or get out of the way.

Be careful what you wish for - any ASIC advice template would have the advice fee in bold font at the top of the cover page.

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