The government’s removal of the safe harbour steps to create a flexible best interests duty has been welcomed as a “big positive” to empower financial advisers.
In the final tranche of the Delivering Better Financial Outcomes reforms announced last week, it was confirmed that the existing best interests duty “safe harbour” steps will be removed.
Jones said he believes its process is one of the drivers that has made simple advice difficult to receive.
Lifespan chief executive, Eugene Ardino, agreed with this sentiment and said the safe harbour steps removal is the “most important” part of the reform.
Speaking to Money Management, he stated: “That’s a big positive. It isn’t statements of advice (SOAs) that are the big driver of time and costs, it’s the safe harbour. The steps are good if you are giving complex advice, but they are over the top for most scenarios and hard to scale,” he explained.
Ardino added that more clarity on the new SOA framework is needed as the government seeks to reach a middle ground between no disclosure and the current stringent requirements.
“This is a reasonable compromise, but the devil will be in the details when it gets to draft legislation.”
Alexis George, chief executive of AMP, which is on track to become the largest licensee by the end of 2023, said the changes will empower advisers.
“The removal of the safe harbour steps in favour of a principle-based approach to the best interests duty will empower financial advisers, lead to new channels for the delivery of financial advice, and make advice accessible to many more Australians.”
Assessing the ‘qualified adviser’ term
Within the new reforms is also the introduction of a new adviser classification termed “qualified advisers”, who are unable to charge a fee or receive commission.
Ardino was pleased with this concept but described the final name as “crazy talk”.
He continued: “There will be enormous confusion over the ‘qualified adviser’ term; if you are offered a qualified adviser for free or a relevant provider, who are people going to pick?
“They will absolutely have to change the name, maybe they could be ‘limited advisers’. Hopefully they can come up with something else because it’s very misleading.”
Last week, the Financial Advice Association Australia (FAAA) painted a worrying picture regarding these announcements, echoing Ardino’s comments regarding the chosen terminology.
Sarah Abood, chief executive of the FAAA, said: “The minister has announced that any financial institution will be able to provide personal financial advice to consumers, using people who are not financial advisers – yet who would be called ‘qualified advisers’.
“There is no detail on the qualifications that would be required, however they would be substantially less than what is currently required to provide financial advice. Thus, the proposed term is self-contradictory and extremely likely to confuse consumers.”
AMP said it intends to work proactively with the government to ensure the implementation of this is practical and workable, George clarified.
This will include enshrining the term “financial adviser” as sufficiently different from the terminology of the proposed new tier of advice provider.
How about ‘Unqualified Advisor’? I agree with the overall concept that many people do not need the full works that is the business of a professional financial advisor. Some will be ok with an AI advisor. But I think there needs to be a clear gap to distinguish a professional financial advisor from the other permutations.
I like the term ‘Product Financial Advisors’ to keep a boundary around the banks and their ilk.
just another step backwards so that big super can get back to the good old days
I would really like to be a ‘Qualified Lawyer’ role on a Diploma level rather than be a ‘Professional Adviser’. Ask Mr. Jones if we can carve this one out in his former profession just for me. I told my tenured Teacher double degreed spouse about what their understanding of it was and they laughed and said that is sure to cause confusion as they don’t even understand even when explained. This is INSANITY!!!
I think those that work for banks and superfunds should be called ‘Product Financial Advisers’. They’re not holistic financial planners. All advisers and planners should be qualified so the concept of ‘qualified adviser’ should apply to everyone. It’s too generic as a concept. And lets pause for a moment to reflect on the constant legislative change that the actual financial planning profession has been put through over the past two decades. I can’t think of another sector that has been through so much change. Some of this latest change though feels to set back the improvements made and turn the industry into a profession. My own strong opinion is that verticial integration should have been removed. Advice should be allowed to self-actualise without products lurking in the background.