The proposed opt-in arrangement will negate the contracts created between financial planners and their clients, which could have a devastating effect on small financial planning practices.
That is the main point contained in a letter to Financial Services Minister Bill Shorten (pictured), written by a managing director of a small Melbourne financial planning practice.
In his letter, Raymond Costello of Rubicon Financial Services told Shorten about the effects the proposed opt-in arrangement would have on his practice.
The Federal Government had released a revised proposal as part of the Future of Financial Advice information pack, which sought that clients opt-in every two years instead of once a year, as previously announced.
Most of Rubicon’s income came from monthly advice and portfolio management fees payed by its clients – an ongoing arrangement which could be ended at any time by a client, according to Costello.
“Our clients and ourselves freely enter into a contract for the supply of services on an ongoing basis,” Costello wrote in his letter.
“The proposed opt-in requirement is a basic breach of our rights to enter into such a contract.”
The effect would be to destabilise the businesses of many small independent financial planners who depended on a consistent flow of advice fees to fund their practices, he wrote.
Costello asked Minister Shorten if any person with “public good in mind” would advocate opt-in for the compulsory superannuation system.
“We are entitled to assume that the most ardent advocates of the opt-in proposal, the industry super funds, think they will benefit,” the letter stated.
Costello asked the Government to craft an alternative proposal to the one announced and reconsider the current approach.
