AFA advocacy pack urges a slow-down

The Association of Financial Advisers (AFA) has provided members with an “advocacy pack” with which to lobby politicians which argues for a slow-down in the rate of change being imposed on the industry.

The pack provides advisers with key messages to deliver to their local members of parliament with the theme being that advice is being made unaffordable, advisers need time to adapt, that most advisers work in small businesses and that life insurance is a critical safety net for all Australians.

The advocacy pack traverses the Financial Adviser Standards and Ethics Authority (FASEA) regime, the removal of grandfathered commissions and the future review of the Life Insurance Framework (LIF), making clear the potential damage which risks being inflicted on the industry.

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Where grandfathered commissions are concerned, the AFA has pointed out that while the Government proposed to remove then by 1 January, 2021, the Treasurer, Josh Frydenberg, “has since issued a Directive to ASIC to oversee the removal sooner”.

“This was done without any warning or consultation and the actions of Australian Securities and Investments Commission (ASIC) are already causing significant stress for some of our members’, impacting cashflows and also business values,” the AFA document said. “This will send some businesses, that have larger loans, secured by grandfathered commission clients, bankrupt as their business valuations decline drastically. The Government has now introduced legislation and product providers are starting to move early.”

It said the AFA supported a practical transition to remove the remaining trail commissions and was asking for consultation to extend the removal timeframe to three years.

On the question of the future of life insurance commissions, the AFA is urging its members to emphasise Australia’s under-insurance problem and the international experience suggesting that a ban on commissions does not work and delivers a worse outcome for consumers.

The advocacy pack finishes on the issue of the pressures being imposed on small business and the huge cost pressure on financial advice businesses from a range of sources.

It makes the following points:

  • Financial advice businesses have made decisions over the last five years based upon the law that was in place at the time, however they now face the prospect of fundamental changes that will seriously challenge their viability.
  • Banks have lent money to financial advice practices on the basis of the laws that applied at that time and the conventional models for the valuation of advice businesses. The Royal Commission has fundamentally changed those valuation models and now there are many financial advice practices at great risk.
  • Ultimately, we are seeking a sensible process for the consideration of these proposed changes and to have the opportunity to engage in the debate as to whether each of these changes will result in a better outcome for both current and future clients and whether better solutions are available.

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Good old AFA...still representing the lowest common-denominator. Why don't they look at those advisers who have successfully adapted their business than defend those who can't?!

The changes proposed, as well as those already implemented do very little to benefit the client. All these changes have done is push the cost of advice 'sky high', pricing advice way out of reach for many battlers and 'Mum and Dad' investors (i.e. those that actually NEED advice).

Millennial Adviser, your point of view obviously comes from a place of ignorance and inexperience. Give me an adviser with 20 years experience who has the best interests of the client at heart, rather than a millennial adviser who has a trumped up degree and little knowledge of the real world.

The same experienced advisers who are getting done for misconduct and who brought the industry into the state it's in now? My degree is worth a hundered more credits than your grand-fathered CFP Pops! Good luck for the'll need it ;-)

Ok...we obviously now have a deliberate provocateur on board.
Most likely not an adviser at all and just placing the bait for respondents to bite on.
We need to leave this fake alone and give them nothing to work with.

You old farts are tooooo easy lol

Personally I would like ASIC to do the review of Life insurance sooner. In fact the sooner the better. They have already admitted that churn was only relevant to a less than 50 advisers out of 20,000! This was admitted after the LIF was passed and the dodgy FSC members provided lapse data to ASIC
Since the LIF was passed the same dodgy FSC members have all been increasing rates on existing customers at ridiculous rates whilst reducing premiums on new business for exactly the same products trying to create a churn issue that was not there in the first place and increasing lapses on existing customers owing to affordability.
This practice has to stop and the FSC and its members need to be taken to task by ASIC.

Your description of " the lowest common demoninator" you wound up little piece of sh* t , are long term, ethical and committed advisers who, over many years of hard work and determination have helped to build the financial services industry and profession you now appear to pretend you own because you have been on the earth for longer than 5 mins.
Why don't you show some level of respect and empathy for those who have created the space in which you now play.
If it was your father or mother who had successfully run a financial services business over many years which had provided you with a high standard of living and a good education, you may just think a little differently.
In the middle of your next organic yoga class, beard conditioning treatment with seaweed, taking pictures of yourself sipping your cold pressed Kale juice or riding to work on your Segway stop and think about something else other than where you sit in the world.

Well said. Overindulged, ignorant, entitled snot nosed little turds whom have never faced real adversity and real life difficulties. They think that "What is now, always has been, and always will be", not realising the blood, sweat, and tears invested; the BILLIONS of dollar equivalents and MILLIONS of Person-Hours expended to bring society and the Financial Services Industry to this advanced, albeit imperfect point.
Personally, I think that a minimum of 2 years National Service [military or civil] post high school would be the greatest contribution to Australian society imaginable, and would help stem the current slide into infantile "Professional Victimhood" and intellectual mush..

Love [and always read] your well written, well substantiated comments.

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