General Advice Can work with appropriate consumer protections. Every time, I look at comments section of money management and IFA all I can see is constant shouting, and demonising of alternate form of advice. Whether that, be intrafund, general or digital advice. I can appreciate the challenges of being a self-employed financial advisor who have to face the reality of declining business revenue, uncontrollable expenses brought on by constant legislative tickerings and moral incompetency in certain section of industry. But that doesn't mean everyone is there to get you.Significant majority of the industry has great appreciation for the work done by financial advisor who provide wholistic personal advice, as well as for those who provide personal risk advice. However, these solutions are not perfect fit for everyone. Each client is different, and regardless how much tailored your services may be, you are not able to meet the need of everyone. Hence, there has to be alternate form of advice which meets the needs of the wider market.
Yes, I agree general advice has been gamed by certain section of industry in past. In fact, individual who were truly looking to exploit the system, didn't provide any advice at all. No- Advice is not a viable long term solution. Even vegetable vendors have to express an opinion to describe the difference between Desiree potato & kipfler potato. This opinion has potential to impact buyers decision. In financial context, that is financial advice. Hence appropriate consumer protection has to be provided. So household are not sold kipfler potato, when consumers likely side dish for dinner is a mash.
Soon to be implemented, Design & Distribution obligation, coupled with New Anti-Hawking law & ASIC product intervention power are step in right directions. These legislation sets the right expectation amongst the wider industry participant. Everyone has an obligation, whether that be product manufacturer or advice provider/product distributor. An obligation to ensure that product does what it is supposed to do, the person buying the product knows what it is supposed to do, and whether it would be of use to someone in their circumstances. So, no more kipfler potatoes for mash connoisseurs.
However, this is not enough. General Advice advisers must be empowered to ensure they can speak up, when they notice system is not working. When they notice the person buying potatoes is blind and can't spot the difference between desiree and kiplfer. And this empowerment will only happen if they are held to the same standard as personal financial advisor. This means if you provide general financial product advice, you should have same level of educational qualification, similar training on ethical values & principle, and similar exam to test the competency. Courts have already established, in certain circumstances fiduciary duty applies equally to general advice and personal financial product advice. This is despite the statutory best interest duty not being applied on general financial product advice. By applying the exact same educational standard to general advice advisor, industry is not only ensuring better outcome for clients but also minimising risk to the business and in turn wider industry. There is no better advocate for personal financial product advice, then a general financial advice provider.
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