InFocus: The ASIC levy - the real-life impact on advisers

The cost of regulation is impacting all planners, but small sole practice firms are particularly affected. Chris Cornish is the principal of his own West Australian firm, Cornish Wealth Management, and he explains how he is being impacted.

“I own a small sole-planner practice. I’ve been a financial planner for 16 years and operated under my own licence for 10 years. And I’ve had a gutful of this government.
Any long-term financial adviser will agree that the regulatory changes never seem to stop. And with each change, the industry participants try to do their best to adapt. However, the last couple of years have been unlike any others. 

The Financial Adviser and Ethics Authority (FASEA) exam we all need to take, the additional degree qualifications some need and the business operational changes stemming from the Hayne Royal Commission most need to make, have massively increased costs and taken up an inordinate amount of time. 

Meanwhile the Royal Commission recommendations have dealt body blows to the revenue of many practices. As too has the ridiculous Government intervention into how private enterprises (life insurers) remunerate those involved in their distribution (advisers). And many practices, me included, have actively cancelled a significant number of long-standing client relationships because the cost of servicing them is now too high for their modest account balances.

But the icing on the cake, or rather nail in the coffin, is the $5,122 tax bill I’ve just received from the Government to fund the Australian Securities and Investments Commission (ASIC). And for what? Talk about fee-for-no service.

$5,000 is a huge sum of money for a small business, and I feel for some of the larger practices who employ financial advisors. At a cost of $2,426 per adviser, they’d have to be questioning whether they should be culling staff. Especially because we know ASIC will keep increasing this fee; after all, thanks to the Government’s ASIC Supervisory Cost Recovery Levy regulations they are now a bureaucracy with an open cheque.

The Federal Government must have missed the memo that pretty much all the banks have exited the advice industry, and that their red-tape and new taxes are now just negatively impacting small businesses. 

It is interesting to note that the ASIC tax charges “Licensees that provide general advice only” a flat fee of $2,081 no matter how many advisers they have. 
Imagine if the super funds, and their legion of advisers dispensing general and intra-fund advice, only pay $2,081 for the right to dispense advice. 

If it turns out the $200 billion behemoth AustralianSuper only has to pay $2,081 to provide advice whilst my one-man band has to pay $5,200 then the Government, and ASIC, should hang their heads in shame. 

I will likely survive, as I have in the past. But Josh Frydenberg has a lot to answer for, and with friends like the current Federal Liberal Government, small business does not need any enemies.”  

Chris Cornish volunteered his views to Money Management

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MIA Jane. Is it true that ASIC charge super funds a pittance while small business fund the majority of the fees? Is it true that Super funds charge a % fee of all investments, while they provide the same service to a $100 member verse someone with $1,000,000. Is it true that ASIC believes advisers should not charge % fees because this would be inequitable?

Well said Chris. Someone buy that man a beer.

Well said Chris.

Yeh yeh Chris 100% with you.
We are fighting a war that is hard to understand for Real Advisers.
Canberra has no idea but more and more REGS. Freaking mind numbing morons.
Let’s ALL refuse to pay ASIC fee as a start.
Let’s get rid of Frydenberg he hates Advisers

Hear hear!

100% Agree Chris.
Frydenberg has been an absolute disaster for 8 years to Small Business Advisers.
Frydenberg needs to be go !!!!
Advisers need to encourage all clients to vote these clowns out.

Well said Chris. The Coalition has turned tens of thousands of financial advisers and their families into enemies. Huge numbers of us will switch to Labor at the next election and lobby our clients to do the same. Not because we think Labor will be any better, but because the Coalition needs to spend time in opposition to reflect on the mistakes they have made and the damage they have done.

You couldn't be more accurate Chris. As a small husband and wife practice we have just handed over $7,549 to ASIC to enforce action against banks who are out of advice. The best example of take the money and run ever seen. And some of this fee is because we offer a service to clients. The fact that not many clients use it, means that we are no longer going to provide insurance advice to clients (one of many).
We have also had to put on a staff member to help cope with the administration burden. This means it now costs us $160,000 a year BEFORE we make a dollar. And people wonder why it costs so much to get advice. Canberra have no clue and this government are no friend of small business.

true. I have always said that by 2026, there will only be 5,000 registered advisers, they will serve HNW only.

all other advisers will just not survive, as you rightly pointed out it is not economically viable to do so.

Adviser ratings which sell data on advisers were very optimistic, even those, whose fortunes are intertwined with the number of advisers have revised their forecasts to only 13,000 to remain - a reduction of 50%.

but, even 13,000 is way too optimistic, they are not seeing what I am seeing, pretty much everyone I know is leaving first big drop-off will be Jan 2022. there will only be 5,000 left. and that is a total disaster for the industry and for the public.

unfortunately, no one seems to be burdened with trying to undo this unfolding disaster. I have written on this topic so many times and written to many of the professional bodies I am a member of but no one is listening.

there's nothing anyone can do but to watch this awful trainwreck come to pass.

Agree with your sentiments exactly, but that number won't be as low, but certainly less advice businesses and more advisers shifting to a call centre. I will add that your un-professional body does not care Mr CFP, because they've just renewed their agreement with AwareSuper and signed up Hesta Financial Planning etc etc, and Hesta and AwareSuper are now helping the FPA to drive the direction of advice in Australia. From their perspective this is just shuffling the chairs around. Unless you work for one of those firms, you're actually the problem by being a member of a body that receives payments via the Professional Partner Program. So please help out planners and leave the FPA.

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