There are still a number of financial advisers who might struggle with understanding the full implications of the code of ethics, as well as its implementation, and what the best interests duty really stands for.
According to David Harris, chief executive of Advice Evolution, advisers are now in the position where they are not restricted and some of them are grappling with where the best interests duty actually stops.
This is particularly problematic for those advisers who have recently left the vertically integrated practice models and are struggling with the fact that their advice has been based on the best interest of the licensee, he said.
“It is a complicated scenario where the advisers have been pushed heavily in the best interest duty and that is where I see the ASIC [Australian Securities and Investments Commission] is working at the moment,” Harris said.
“In most cases advisers as a general rule work in the best interest of their clients that is just the way they operate and they are often being tarnished by the fact their advice documents have had to comply with the best interests of the licensee.
“So now we have many advisers that come from integrated models to us, and we are having to retrain them to actually realise that it’s not about the licensee best interest duty it’s the clients’ best interests that is still number one.”
For Advice Evolution, which has currently close to 70 active authorised representatives who are financial planners and of which 75% have already passed the Financial Adviser Standards and Ethics Authority (FASEA) adviser exam, recruiting new advisers is relatively easy compared to a period four years ago.
“Because there are less people coming to the industry and it is hard to get in, I have to be the gatekeeper because there is so many people [advisers] knocking on our door,” Harris said.
“Four years ago recruiting was quite difficult for us, whereas now is the opposite, I get to pick and choose and that makes it really hard for other advisers who need to move.”
Harris said that for the rest of his advisers within those who have not taken the FASEA exam yet it should not be problematic to pass it.
“These are the guys who have decided to wait a while based on the changes in the FASEA legislation as they were given a little bit more time to do it,” he said.
