Melbourne planner tells Shorten of opt-in impact
The proposed opt-in arrangement will negate the contracts created between financial planners and their clients, which could have a devastating effect on small financial planning practices.
That is the main point contained in a letter to Financial Services Minister Bill Shorten (pictured), written by a managing director of a small Melbourne financial planning practice.
In his letter, Raymond Costello of Rubicon Financial Services told Shorten about the effects the proposed opt-in arrangement would have on his practice.
The Federal Government had released a revised proposal as part of the Future of Financial Advice information pack, which sought that clients opt-in every two years instead of once a year, as previously announced.
Most of Rubicon’s income came from monthly advice and portfolio management fees payed by its clients – an ongoing arrangement which could be ended at any time by a client, according to Costello.
“Our clients and ourselves freely enter into a contract for the supply of services on an ongoing basis,” Costello wrote in his letter.
“The proposed opt-in requirement is a basic breach of our rights to enter into such a contract.”
The effect would be to destabilise the businesses of many small independent financial planners who depended on a consistent flow of advice fees to fund their practices, he wrote.
Costello asked Minister Shorten if any person with “public good in mind” would advocate opt-in for the compulsory superannuation system.
“We are entitled to assume that the most ardent advocates of the opt-in proposal, the industry super funds, think they will benefit,” the letter stated.
Costello asked the Government to craft an alternative proposal to the one announced and reconsider the current approach.
Recommended for you
Unregistered managed investment scheme operator Chris Marco has been sentenced after being found guilty of 43 fraud charges, receiving the highest sentence imposed by an Australian court regarding an ASIC criminal investigation.
ASIC has cancelled the AFSL of Sydney-based Arrumar Private after it failed to comply with the conditions of its licence.
Two investment advisory research houses have announced a merger to form a combined entity under the name Delta Portfolios.
The top five licensees are demonstrating a “strong recovery” from losses in the first half of the year, and the gap is narrowing between their respective adviser numbers.
