As part of the Australian Securities and Investments Commission’s (ASIC’s) move to clean up the financial services industry, it has banned Queensland-based Breakaway Finance Group and Millenium 3 adviser, Gregory Forster, from providing financial services for five years after an investigation showed he provided inappropriate advice to clients and failed to act in their best interests.
The ASIC investigation found Forster had failed to take into account his clients’ actual circumstances when providing advice, instead obtaining limited information and making a series of assumptions about their personal circumstances.
The investigation also found Forster recommended new superannuation and insurance products to his clients without considering their existing products and services, and in many cases, those insurance products’ premiums were not affordable. Forster’s clients’ premiums were paid from their superannuation, which could potentially lead to the erosion of their balances.
The corporate regulator found Forster had significantly understated the costs associated with the implementation of his advice, particularly the costs associated with running a SMSF.
As well, it was found Forster had not complied with the requirements for a Statement of Advice, and instead of disclosing the dollar value of fees, he used percentages.
Comments
Setting aside from what other issues raised here, Advisers are being setup for a fall, on the one hand if we don’t advise on what they NEED and a subsequent claim results in a payout which is insufficient for a client’s circumstances the Adviser gets sued OR now on the other hand, if we advise based on a client’s Need and let the client decide if they wish to spend the cost of the premium to protect their financial position, we can be banned by ASIC for eroding the client super balance!
Totally correct PaulB....damned if we do....damned if we don't. And the ultimate cause......."Lawyers".....say no more.
maybe i will just become a lawyer it's not hard to do. i did a much harder masters degree in finance. i can pass law quite easily.
then i'll just get people fighting with each other while i drag the case along for as long as i can. no siree, no conflict there. all ethical going to disclose fees upfront, then again increasing each time and again as i bleed them dry
yes siree, i am going to be a lawyer
at least it's 30 hours less cpd per annum
Couldn't agree more Paul B.
Keep up the good fight.
Is ASIC aware of the law?
Question One
"....sometimes they were significantly more than his clients’ NORMAL superannuation contributions...."
Does this mean any recommendation of insurance where the premium is larger than NORMAL super contributions is a no go? MASSIVE IMPLICATION FOR EVERYONE.
Question Two
“ASIC found that Mr Forster had made those recommendations even though the clients had originally sought his advice because they were unhappy with their superannuation balance.”
So, when a client walks in, is ASIC now saying do no further investigation of the clients needs.
MASSIVE for BID.
Thats the problem with high commission rates. Tends to attract salespeople, not advisers. I see people on Linkedin beating their chest about their prowess on providing cover for their clients and adding trophies to the collection. If commissions get wiped I probably won't see these posts anymore...oh joy. "We're a fee for service firm...but still accept commission on life insurance...on top of the holistic advice fee". I still struggle with this concept.
Get, if y lou u struggle with your firm accepting commissions I have an idea for you. Offer to take a pay cut equal to the drop in commissions. Let me know how you get on.
The problem with high commissions is that it attracts glorified salespeople thinking they are qualified to give financial advice. So I agree with you Gez. Perhaps when the glorified salespeople leave the industry for good, we can then start thinking about the financial advisory sector actually become a profession and earn respect the way an accountant does.
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