AMP Limited wants the Government to consider changes which would make it easier for people to access scoped, scaled and episodic advice, arguing that over the last several years the financial advice regulatory burden has increased alongside costs to a point where “advice can only be accessed by the wealthy”.
AMP has made the call in its submission to the Government’s Retirement Income Review at the same time as it works to reshape its advice business.
At the core of the AMP submission is a call for the tax deductibility of the preparation of financial plans and for “changes to the processes that would enable greater access to scoped/scaled/episodic advice”.
In doing so, it said that the tax-deductibility of advice had been proposed multiple times, including within the Ripoll report which underpinning the Future of Financial Advice (FoFA) changes but little had been done.
“The extension of tax deductibility of advice would immediately reduce the cost of advice and therefore improve access to advice for individuals approaching and in retirement,” it said.
“The introduction of scoped and scaled advice as part of FoFA was also seen as a way of reducing the cost of advice to the client, including episodic advice, but for a variety of reasons scoped and scaled advice remains expensive, to the detriment of the consumer,” the AMP submission said.
It said that a key question for policy markers related to the cost of advice because it was “now at a point where financial advice is difficult to afford for the many people that most need it”.
Comments
Forget about tax deductability of advice. Do we really want more Government oversight and restrictions? The solution to affordability is very simple. If there aren't any commissions or asset-based fees involved in the advice, no SOA (or ROA) should be required. The adviser should be able to type up a simple one page summary of their recommendations, akin to a doctor writing a script. Maybe a couple of other caveats, such as the exclusion of margin lending, derivatives and structured products. But that's the solution. The vast majority of clients don't read SOA's anyway. They are written for ASIC and dealer group compliance staff, and the client pays through the nose for it.
Spot on correct. Plus I would add that an SoA is now a "BCM" (Butt Covering Memo) designed and voluminously worded to protect advisers from the malicious scrutiny of vexatious, litigious lawyers, ASIC and the like. Let's make advice sensible, logical and affordable for those who need it most......everyday Australians. Currently it's only accessible by the wealthy.
Yep … got it in one. Whole system needs a complete overhaul. Not sure it's going to happen in my time.
Wholesale investors obtain "advice" because they do not need to pay for Fee Disclosure Statements (now in advance) nor Opt in notifications. Often they are quite happy to pay reasonable ongoing fees from an adviser. Plus they can receive low cost Investment Memorandums, not expensive time wasting SoAs. On the other extreme, calculative members of Industry funds can get other members to pay for their financial advice, via the socialist "Intra-fund" advice model, where over 70 percent of the members (who don't receive advice) pay for less than 30 percent that do. But it is the retail investor that the Govt thinks needs "protection" is the one that will now miss out on receiving advice. If a Martian landed in Australia tomorrow & did research on our regulatory arrangements, it would think we have totally lost the plot, as they would identify 3 distinct categories of advice recipients.
AMP is trying to make it simple and cheap good one i would like to see that happen i get nothing from term deposits in st george and i am sick of moving the money every 3 months to get a better rate or drop down to small%
Pfft what a surprise an integrated product manufacturer is finding it hard to get inflow and wants to push Robo as a revenue stream to service their massive orphan book.
AMP have been touting this for years. Good luck lobbying government while your share price is crap, your planners hate you and the IFA market is ripping dollars off you at a rate of knots. You’d have a better chance re-floating Whole of Life at the CIPR review!
2020 and we're calling for advice to be tax deductible. that's pretty bad. Only a decade behind AMP.
Add new comment