Key licensees hit back at FPA adviser registration proposal

4 June 2020

Six of Australia’s most significant financial planning licensees, five of whom have professional partner status with the Financial Planning Association (FPA), have rebuffed key elements of the FPA’s policy proposals which would see adviser registration over-ride licensee control arguing they were never consulted. 

A joint statement approved by the chief executives of Centrepoint, Fortnum, CountPlus, Paragem, Easton and Fitzpatricks has declared that: “The FPA policy is a surprise and ill-considered given the hard work that the entire advice sector has put in to overcome historic shortfalls brought to light by the Hayne Royal Commission and in light of the leading work that AFSLs bring in areas of education, risk mitigation, compliance, consumer best interest measures and commercial support to advisers and their clients”.  

It went on to state that “the key areas of Cost and Consumer Protection must be understood, thoroughly, and not diminished through poor policy”. 

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The statement conceded that the FPA’s proposals for an investigation of reform of the Corporations Law as it relates to its focus on product, not advice, had merit. 

However, it added that any consideration of this by Government must also look at the true costs and consumer protections currently afforded under existing AFSL Licensing obligations. 

What is more, the licensee chief executives pointed out that financial advisers already had the ability to self-license albeit that “ an individual planner that does self-license will incur the set costs of compliance, governance, and a raft of statutory obligations in providing that advice.  These costs are not discretionary. They are mandatory and - in the absence of scale - would likely rise to the detriment of the consumer” 

“The AFSL system plays a significant role in the oversight of financial advice (that is not limited to product). Licensees have played and continue to play a crucial role in developing, training, educating, and supervising licensed financial advisers,” the statement said. 

The statement was attributed to Neil Younger, Group chief executive, Fortnum Private Wealth, Angus Benbow, chief executive, Centrepoint Alliance, Grahame Evans, chief executive, Easton Wealth, Matthew Rowe, chief executive, CountPlus, Matt Fogarty, chief executive Fitzpatricks Private Wealth and Nathan Jacobsen, managing director, Paragem. 

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"Six of Australia’s most significant financial planning licensees" Hardly. ... And coincidentally the ones with the most to lose.

Perhaps not, but it’s six of the better quality, larger licensees out there at the moment. With the banks exiting these mid-tier non platform owned groups are going to get big quickly with high quality businesses that don’t want the PITA associated with self-licensing.

Furthermore, the only person in that list who has a decent FP qualification and advice experience is Rowe. That tells us quite a lot really.
The rest are just 'Execs' - and what would they know if they are less qualified than the people they oversee!

What a surprise, these guys (and they are all guys), oppose this proposal. The 'hard work' into and following Haynes has been largely borne by advisers at the frontline. If anything the RC proved many corporate licensees were not up to the job of supervision. If we are truly to become a profession we need to stand on our own feet either way. It has become evident in the wake of Haynes that Corporate entity's support wilts at the first application of any heat. Corporate entities can adapt to become service providers to indvidual licensee, as indeed some already have. This ought to become easier with increase penetration of technology solutions. The Corporate licensee model is an anachronistic confection reflecting an era long past. Move on.

Well done FPA.

Detrimental to clients! Ha. More like detrimental to these Dealer Groups revenue and, where they are ASX listed, their share price.

ASIC will win this one. Whatever they want, they will get. However the FPA's major issue is why members will renew on 1 July 2020. At the moment, given their ineptitude on effective lobbying against compliance costs relating to the client opt-in process, and failure to flush out the intra-fund advice racket, creating an unfair playing field, the reasons to renew are almost nil.

Steve, members will renew so that they can keep their TPB registration.

Old Fella is right.

Steve's clearly already existed the industry....

I take it your employer pays for your membership, and you get a discount, and you have to a member because of TPB status. It's the advisers like you that should be leaving the industry. Steven is on point.

incorrect. I simply have had enough of paying money for an organisation committed to destroying my business.
Simply join the SMSF Assocation, re-register with TPB, & let your FPA membership lapse. You have no need of the FPA now.

or you could be a professional and pay $550 and do a course in Australian tax and commercial law and meet standards based on education. Oh wait FPA members are the lowest of the low

Yogi, I take offense at that statement. My membership of FPA is my own business. You are free to slander me for that membership but I do not have to just accept your scorn.

The discussion is self-licensing. You can dislike the organisation for its approach but membership does not define the members.

A little more acceptance of diversity of opinions would better reflect on our industry and on each of us as individuals.

To only be told that it does not comply with FASEA and you need to do it again.

A letter signed by 6 folk whose salaries the clients of we self licensed folk aren't needing to pay - that keeps the cost of advice to our clients (relatively) affordable. People often ask "How much does it cost to have your own AFSL?", and it continues to be a better $ outcome than their licensee cost. How much protection does FASEA offer advisers (relevant providers) via their AFSL? No more hiding from taking responsibility.

So the truth shall set you free. AFSL's are now finding out what the advisers have known for a very long time. The FPA are only loyal to the banks life offices and industry funds and whoever else are part of the Financial Services Council. Advisers and their AFSL's never really mattered in the grand scheme of things. These AFSL partners were played like advisers for fools. Now that De Gori and on the AFA side Kewins of the world have satisfied their masters such as banks life office ind the ISN, these traitors will ride of into the sunsent and maybe show up at the home of their masters. Watch for this. AFSL's will be destroyed and advisers done over. Never paid FPA AFA would be my stance from a legal viewpoint. I see lots of theirves in the law profession but these guys at the AFA and FPA can sure teach us tricks. Ethics you say. ? What a pathetic joke theAFA and FPA have proven to be. Save your money in case their invoices show up for "membership". Fess foe NO SERVICE....

Totally correct.The comrades at the FPA are drunk on the Communist cool-aid. This is the first step to bring alignment into union funds. Watch this space ... it is not your association anymore.

Again the FPA is out of touch and out of step. ASIC would do well to decide to work proactively with the better licensees. There are some great well run individuals out there, there are some absolute shockers which will help fuel the next round of scandals.

Having that second tier of oversight will help keep the damage to a minimum.

Removing a layer of training, guidance and support is not helpful when we are all trying to digest and digitise the latest round of changes with more changes yet to be legislated.

Disclosure: Adviser not an AFSL employee.

Where were these dealer groups during the Ripoll Inquiry? FOFA? Hayne Royal Commission? LIF? FASEA Code of Ethics? 12month Opt-In draft legislation? Misleading advertising by industry funds? Unfair coverage by the media? Ignorant comments by politicians? Blatantly false comments and insane over-regulation from ASIC?

They have been silent. They have stood by and watched financial planners getting beaten to a pulp. But now they find their voice! If they are looking for sympathy from financial planners, they can stick their unfair contracts, conflicted product provider deals and butt covering additional red-tape where the sun doesn't shine

The fees paid to these irrelevant business Centrepoint, Fortnum, CountPlus, Paragem, Easton and Fitzpatricks adds to the cost of financial advice to the public. We should not have to pay for their high salaries and overpriced services that provide little benefit to the advisers and the clients. Look at the General Insurance Brokers business models 99% have their own AFSL.

The Licensing system is broken in financial advice, it has been for years and has achieve very little in relation to compliance standards or client benefit. It has only been a tool for government departments to make their job easier.

It is time to remove all the middle layers of waste that add to the cost of advice and get back to the correct relationship of client and adviser.

Well done to the FPA to make this move, the AFA and SMSFA should join the call for change.

These dealer groups are just smaller versions of AMP, MLC etc. They sell inhouse products via their control over advisers. It is no surprise they are squealing. They probably thought Hayne had given them the gift of the century when Hayne frightened their bigger competitors off the scene, but allowed these mid size players to continue with the same vertically integrated models that cause consumers harm.

Don't believe a word dealer groups say. They have a massive conflict of interest. And don't believe a word their "loyal advisers" say either. Many of them are making extra money from inhouse products via shares in the dealer group.

It appears only common sense that we move away from licensees and be independent under a single monitoring body. With the implementation of the Code of Ethics and the future establishment of a board responsible for enforcing this, surely this would negate the use of the "middle man" being the licensee.
The power of the board allows for de-registering, much in the same manner as Accountants and Lawyers.
XPlan offer a Model Office (so there is the template sorted), Research houses provide the investment support and we are therefore responsible solely for our ongoing education, again much the same as accountants and lawyers.

Yes this is exactly the structure we should be having. It also means we get rid of TPB, merge the AFA and FPA as a single monitoring body but have advisers on the board and as CEO. Everything will be streamlined, costs reduced, and better outcomes.

Bring it.

Have the 'Authorised Representatives' (of licensees) who support this proposal actually considered the consequences for them?

They will be totally and directly responsible for their business operations in respect of all financial services laws. No more, 'but my licensee said I have to do this' excuses. The cost and obligations of ensuring compliance will be bourne by them (please don't say you are doing this now until you find out the actual cost and obligations). Further, do you think ASIC and the government will agree with this proposal? ASIC has difficulty in carry out its role supervising the current number of AFSLs - how will it supervise 25,000 plus ARs.

'Be careful what you wish for. There's always a catch'.

Since when has "but my licensee said I have to do this" ever been a valid excuse? The adviser is responsible for the advice, and ASIC has never accepted that as a justification. So nobody can hide behind it anyway, but at least this way you are ACTUALLY responsible for your advice and not forced to do it a certain way regardless

You miss the point. I agree that the adviser is responsible for the advice but what about the compliance obligations an AFSL must comply with. These will now be the Authorised Representative's responsibilities. Your response is exactly what I am talking about - most ARs are not aware of the additional obligations the law imposes on AFSLs and if those obligations are imposed on 'licensed ARs' ,the consequences for the AR. You don't think ASIC and the government will allow ARs to operate in a different compliance regime to AFSLs do you? Read RG104

- "My licensee said I have to do this" has never been a valid excuse. You are deluding yourself if you think your dealer group's compliance is protecting you from the regulators. Who told you it is? That's right, your dealer group.
- The cost and obligations of compliance are actually less when self licensed compared to being an AR of a dealer group. Self licensed advisers only need to comply with the law, not the dealer group's extra layers of butt covering bureaucracy.
- ASIC won't have to supervise any advisers or advice licensees. The proposal involves taking this responsibility away from ASIC, TPB, FASEA, etc, and giving it to a single supervisory body which is structured specifically for individual adviser regulation. ASIC will be delighted to wash their hands of it and get back to other things.

At the end of the day dealer groups do not exist to help advisers. They exist to generate revenue from inhouse and white labelled products sold by advisers under their control.

You seem to be on top of all the costs - So what does it cost to have an external consultant conduct a compliance assessment of a financial services licensee and, what is the cost of an audit of client files (per file)?

what's it cost to pay for a State Manager's salary, a CEO's salary and the audit staff that report to the audit staff that report to the assistance to the assistant head of compliance that report to the board in order to cater for the 1 adviser out of 100 in a large dealer group that won't follow the rules. what's that cost?

But yet...every other profession manages to do this.

They manage to take on responsibility for their own conduct, behaviour and work.

The value of licensees was questionable before FASEA put it all on us individually.

Now, they’re a legacy of a poorly constructed system based on historical distortions.

Final point - how much of the compliance burden comes from the law, and how much from officious compliance managers generating guidelines to justify their own salaries?

I’d rather live and die by own sword than rely on the paper shield of the ticket clippers.

Bring it on.

25,000 plus AR's. more like 10,000 if you are lucky within 18 months max.

6 licensees who are set o become irrelevant if this comes to pass, or course they would speak out against it, their gravy train stops

Better late than never, i congratulate FPA to finally come out openly in support of Individual licensing. The sol called six Licensees who choose to berate FPA need to visit FASEA code of Ethics, this is outright conflict of interest to maintain vertically integrated model.I choose to be self licensed following 2019 Royal Commission and proudly proclaim to my clients. On an another note FPA & AFA have to merge sooner than later to make this proposal through. These Licensee can continue to offer support services and dare I say the Executives of these Licensees should have similar qualification and experience as on Individual AR'S.

If the AFSL system is abolished, the services provided by "licensees" is still relevant. You don't need a licence to provide services to a professional practice.

Commissions have been abolished and it's now fee for service. Professional practices need to outsource to service providers like the six very relevant businesses mentioned in this article to help provide research, training, education, mentoring, business advice, best practice, professional year for new advisers, branding, leadership, conferences, cutting edge technology, pre-vet, PI cover, fee collection, conflicts monitoring, breach notices, AFCA complaints management, ASIC monitoring, AUSTRAC reporting, submissions to Government, report templates, contracts with providers, and more. An AFSL is not required to provide any of these services.

The role of the FPA continues to employer agnostic, setting the standards for the profession especially CFPs and testing advice and government policy in the best interests of the client and their advisers.

I think we should all work together to identify the roles and responsibilities in this brave new world of advice for clients.

We don't need FPA scum throwing there misguided two cents in. "Employer agnostic." The FPA gives discounts based on what licensee's you work for. You're hypocritical response given your support of the Professional Partner Program is ludicrous.

Mr Yogi. If you made your comments under your real name, I might be interested in discussing them with you respectfully and with grace and dignity. How about replying with your real name and occupation?

"The role of the FPA continues to employer agnostic, setting the standards for the profession especially CFPs and testing advice and government policy in the best interests of the client and their advisers."

Well that's the biggest pile of crap I'll read this weekend

Dealer group revenue is threatened so they make noise. Adviser revenue threatened and no noise. Dealer groups will soon learn advisers have the relationship with the client and without us, their income stops.
Self licensing is a good move. All advisers licensed directly and 1 body (AFA/FPA) form a super body that conducts audits of advisers and general advice and advocacy. They must report to ASIC any issues identified. ASIC follow up.
A selection of good compliance, technical, business process 'consultants' will remain. Alot of dealer group hangers on will be out of work as they are not needed. As no conflicted fee is payable from a product provider, we as advisers have no incentive to use a product unless it is good for our client. Products will smarten up and improve.
Our licensing will be via ASIC so we can change service providers (compliance consultants, research, education, product solutions) as better propositions come to market with competition. We are not trapped into services that suit the dealer group.
It will clear a very expensive layer of costs (dealer group staff) from the system and may end up with lower costs to clients.

we, the advisers, need total control of our domain and our profession.

we, the advisers reject AFSL's and any others who want to have domain over us.

if you don't get that. you don't get it. but you will get it. get it?

The End. period.


Julie, all the services you mention are either completely unnecessary for most advisers, or can be obtained directly from the source provider without the need for middlemen. There may be a small number of advisers willing to pay a bloated fee for a bloated service package, but I suspect not many.

Hmm what's the bet the FPA have gotten wind of something from the government and we'll soon hear the FPA are putting their hand up to run this administrative body that they've cooked up? I guess it's something to kick the can of their utter irrelevance further down the road.

I just think that FPA Members are the lowest of the low. They're scum in my books. NAB, WBC has left town and now they don't have members. The only members they've got a advisers who are forced to join because of a deal the FPA did with CBA some years ago. You can't have a body claiming to be "professional" and then getting cash payments by large licensee's owned by product manufacturers. Giving one member a 5% discount and another no discounts all based on what firm you work for. Let's be clear here in that the only thing the FPA is worried about is ensuring a gravy train of members via compulsory membership continues. If you're part of that you're SCUM.

If the FPA said they had a plan to reduce child poverty:

The vested interests mob would say...."No, no, no, there's far too many risks. Stick with the status quo"

The other associations would say..."Interesting idea in principle, but it's too soon to be doing that"

The bitter & twisted FPA haters would say... "Well if the FPA's against it, then I'm in favour of child poverty"

Funny, but the problem the FPA have is the following. I don't know if the is actually coming from the FPA trying to represent members, or is it some vested self interest, or is it the voice of AMP or some large Bank.

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