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.