Don’t politicise the RC says FPA’s De Gori

The recommendations of the Royal Commission including the ending of grandfathering should not be allowed to become a political point-scoring exercise in an election year because it risks turning a roadmap to higher standards and professionalism into a blueprint for destruction, according to Financial Planning Association (FPA) chief executive, Dante De Gori.

And while De Gori acknowledges that the FPA has an official policy of removing grandfathered commissions over a three-year transition period, that does not mean it supports the fees paid by clients simply being utilised elsewhere by product providers.

In a column to be published in the next print edition of Money Management, De Gori argues that with the benefit of hindsight it may have been better to extend the Royal Commission’s work by six months rather than push it out into an election battleground.

Related News:

Looking at grandfathering, the FPA chief executive said there were two potential scenarios to consider – the first being what happens when the grandfathered commissions end.

“The primary outcome is that the financial planner will no longer receive that payment – but that doesn’t mean the client will stop paying it. That fee may still be charged and will go somewhere, just not to the financial planner,” he writes.

“Secondly, there’s the risk that clients (as a result of legislation forcing product providers to close products) will simply be moved from one product that is paying a grandfathered commission to another product that does not, but which may not be in their best interest. The client impact of forcing a change of product could lead to tax and capital gains tax liabilities, or loss of social security benefits in some cases.”

“We must remember ending grandfathered commissions will also affect investors who do not have, or no longer have, a financial planner — unless the cost of product fees are reduced to reflect the end of commissions,” De Gori writes. 

He said there were just two examples of the tangible, real implications of political point scoring over a complex issue. If the recommendations were made without an election looming, perhaps the right consultation, collaboration and consideration would be invested before making loose legislative declarations. 

 

 




Related Content

AFA accuses RC of confusion on conflicted remuneration

The Association of Financial Advisers (AFA) has strongly suggested the Royal Commission simply got it wrong when it suggested that intermediaries incl...Read more

IOOF faces class action

Sydney law firm Quinn Emanuel Urquhart & Sullivan has announced its intention to file a class action against IOOF Holdings Limited in the wake of ...Read more

Fed funds’ projections lower in March

EDHEC-Risk Institute’s professor of finance, Riccardo Rebonato, says there are a few reasons why the latest March projections for the Fed Funds in t...Read more

Author

Comments

Comments

Has there ever been a better example of fee for no service and conflicts of interest than the FPA. Throughout all the change over the past 10 years they have thrown their members under the bus and simply agreed to any change without consulting their members or representing their interests. Recently they have done more work on protecting their education revenue stream than addressing important royal commission outcomes affecting their members right now. At least the AFA is trying to represent it members, could the FPA honestly say the same.

Dante, these are valid points. It might be good on behalf of your members to mention that one important reason everyone is ignoring is that planners have invested in businesses and loans outstanding against grandfathered commissions. This will have extreme financial hardship on many advisers. AS a minimum you could have at least raised this topic. I forgot, CBA employees don't have loans so it doesn't matter.

The FPA unlike the AFA is the peak body for the financial planning industry and therefore has the responsibility of helping develop the industry with both consumers and practitioners in mind. The AFA is a lobby group and its history is filled with vested interests. The FPA has to both provide tools for members and lobby on their behalf, but also implement the rules for the next generation of advisers and their clients.

I have my own critiscisms of the FPA, but it's members view it as solely a inwardly focused lobby group for their interests but the public at large view it as the body that will help them. I am a CPA and those members don't complain about it not representing their interests when legislation changes. They trust the body is doing its best for the industry and gets on with it.

Your comment is purely about a perceived failure as a lobby group but the FPA is the only body that's trying to help build something that the public trusts, which nobody else is doing. It's so depressing seeing the other groups chatter on about their own vested interests. Whatever my concerns about the FPA they will be the group that helps more members of the public trust advisers.

If you're arguing about nobody protecting your interests while Australians still reel from the findings of the Royal Commission then you're not looking at the big picture, frankly.

Interesting points, however the general public does not fund the FPA, it's members do. So keep going down this path and Dante will be working for free because simply put the people who are paying the FPA aren't happy with their performance. That's why the only work the FPA is doing at the moment is trying to protect its revenue from education. They know how many people are handing in their FPA memberships, and aren't doing their conflicted CFP course. It's also why they threw their members under the bus on education standards because they can get revenue from it.

Kettlepot, the FPA either works for its members, that by the way PAY them to, or they work for the consumers which is it? They cant have a foot in both camps, this is why they are weak and no one outside of the industry even knows who they are, and the pollies just laugh in their faces

I don't disagree that the FPA needs to engage better with its members. I have no disagreement on that point at all. What I'm trying to understand is how the planning industry will develop and do whatever it needs to do to help encourage more Australians to use the services of advisers. There is literally no other body out there doing that other than the FPA.

It's also not true to say they can't be both. The representative bodies of other established professions like accountants and doctors do both - they lobby on behalf of members when legislation is being discussed, and then they help their members implement the changes. But they definitely do both. They represent their membership and also make sure the public interests are met too.

I don't think I've spoken to a single person, client or service provider who disagrees with the need to have fundamental education standards. It's been too easy for too long for people to rock into the industry, sell an APL, and harvest money. There's little value in that to the average consumer.

The FPA needs to engage better with members, I will completely agree with you both on that point, certainly.

FPA’s De Gori = Is his word is really worth anything???? the bloke lasted a whole 18 months as a financial planner and has been just another leech clipping the ticket jumping around from job to job until he landed FPA gig and all he managed to produce is a education program which only = fee for non recognized education.... maybe time to refund all that money FPA has taken from members.

DISCLAIMER: This presentation was funded by AMP, and the big four banks. It's important to note that the opinions expressed in this article do not represent those of Professional Financial Planners and or Australians. The FPA receives payments which they themselves call member fees from organizations caught breaching the law at the Royal Commission. It's important to note that the FPA works closely with those accused, (according to the FPA) to shape the future of financial advice. Please note that the views expressed here are therefore worthless and do not represent those Professional Advisers. Please also consider that the majority of FPA Financial Planners get their membership paid for them by a product provider (they join not because they want to but it's paid for them) and most professional advisers are therefore not members of the FPA.

Add new comment