More limited advice may be the answer but advisers are being hamstrung

The Australian Securities and Investments Commission (ASIC), the Financial Adviser Standards and Ethics Authority (FASEA), licensees and regulatory uncertainty represent some of the major impediments to financial advisers being able to deliver cost-effective, good quality limited financial advice.

That is the assessment of the Association of Financial Advisers (AFA) which has suggested that while clarification of the rules around delivering limited financial advice will help, advisers are currently being hamstrung by the reality that the current rules make it almost as expensive to deliver limited advice as it is to deliver holistic advice.

In a submission filed with the Australian Securities and Investments Commission (ASIC) affordable advice review, the AFA said the cost and complexity of providing limited advice “is only marginally less than that involved in providing more comprehensive advice, reducing the incentive for doing this”.

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“It is also acknowledged that some licensees make it difficult to provide limited advice,” the AFA submission said.

It said that financial advisers encountered difficulties in resolving the scope of advice with the client, that would enable the them to have total confidence that they will not be challenged for narrowing the scope inappropriately in circumstances where, often, new and even existing clients do not have a clear understanding of the scope of the advice that they are seeking.

“The FASEA code of ethics and some licensee standards make the determination of the scope of the required data collection exercise more complicated than it needs to be for limited advice, often resulting in the decision to seek more information than is relevant or necessary for the advice that has been agreed,” the AFA submission said.

“The requirements in the FASEA code of ethics to consider the clients broader circumstances and likely future circumstances places constraints on how straight forward the provision of limited advice can be.”

The AFA submission said that it was against this background that financial advisers and their licensees needed greater regulatory certainty.

“Licensees need to have confidence that they can encourage their advisers to provide limited advice, without fear that they will subsequently be called out for a breach of the obligations,” it said.




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Comments

Comments

The real issue is that the proposed annual fee renewal makes it harder for retail advisers to get paid,whereas Intra-Fund advisers just get paid for turning up each day.

Members pay for Intra Fund Advisers even if no one is turning up. It's great money. And the member can't opt out.

Sounds like a good investment to me

Certainly is... Industry Fund members are paying for it every day. :P

If your service is good and your advice is sound and the client sees value for money, they will return each year. That's the purpose of the annual renewal notice.

"That's the purpose of the annual renewal notice." Really?
I tend to believe it is a process of "opting-in to a fee that they have already opted-in and can opt out at any time.
Sorry to inform you Billy but client can opt-out at any time - always been that way. Clients can also go to another adviser - and maintain the same products.
Industry Super and Intra Fund Advise - can't opt out of the fees - can only use the in-house advisers - if you don't like that service you much change Products but importantly, unless you move products, you can not opt out of Intra Fund Advise Fees.

Don't forget the paperwork you now have to submit to the platform regulators just to get paid. Part of the form has this statement ......"Describe the services (including, at a minimum financial product advice) provided under ongoing advice fee, adviser fee-contribution
and/or optional features fees advice fee arrangement with sufficient detail to enable XXXX to make an assessment of the
reasonableness of the amount for those services."
Another one has this........... XXXXX reserves the right to decline payment of an advice fee, including discontinuing further payments of an Ongoing Fee for any reason and without giving any reason.
This is now another layer of compliance

An advert for an Intra Fund adviser - how does this full advice get exempted from an SOA?!
We have a unique permanent opportunity for an accomplished Financial Planner (Intra-Fund) to join our phone-based financial planning team. As a Financial Planner (Intra-Fund), you will confidently provide tailored personal advice solutions to our members to help them achieve better retirement outcomes. The personal advice you provide will be centred around superannuation products, and will focus on strategies that bring together taxation, Centrelink, investments and estate planning. You'll assist our members with retirement planning, super optimisation, transitioning to retirement, pension setup and personal insurances

ASIC clearly dont want to make advice cheaper or they wouldnt have made any of the decisions they have made over the last 10 years. They want to see the end of advice for everyone but the top 5% and debt slavery for the rest of the population.

Exactly. All this talk about ASIC "not understanding the industry" and "failing to consult" is misplaced.

ASIC knows exactly what they are doing. They are trying to destroy professional financial advice. All the complications and inconsistencies in advice regulation are a deliberate part of this strategy. ASIC will go through the motions of calling for input on various issues, but then they will ignore it and implement something that makes things worse. Just as they have many times before in the last 10 years. It is part of the toxic Medcraft/Kell culture that still pervades ASIC, in spite of the departure of those individuals.

....and they will work out the next path of maximum destruction by reading all the adviser feedback, understanding it perfectly, and doing exactly the opposite.

Spot on. Except for one thing - they won't ignore all of the submissions. Industry funds will be given an extension to intra-fund advice, allowing them to give advice on a whole range of matters. Financial advisers are equal, but some are more equal than others.

5-6 years ago the industry was very profitable I did not see hundreds and hundreds of complaints as suggested during the 413 review and things were good for both client and adviser
Today due to the constant “ tinkering” along with outrageous changes that help no one the industry is on the brink of collapse
Who’s fault those who have no idea of the industry or what they are doing coupled by their own efforts to substantiate their existence

It goes back to that "solution to a problem that didn't exist".

The only way advice can work going forwards is if we all use ASIC approved checklists, which outline the risks that a client has if they go down the path of a particular piece of advice, which we have to both (adviser and client) sign off to say we've had that conversation and the client understands the risks. The client can use one / multiple checklists if they want more than a siingle issue piece of advice. Then no Licensee can misinterpret whether we've limited scope incorrectly, only ASIC as the ultimate abiterer gets to amend the forms. And the SOA can just get on with talking about the ACTUAL area of advice that the client has chosen. Come on ASIC, get off the fence. It this is too difficult for you to figure out, you have no right to judge us on whether we've made the right call or had the right conversations or not!

Maybe ASIC should regulate all our APLs, so that only good investment choices can be made?

Oh, wait... they already have... "Industry Funds"!!!

While not necessarily via ASIC, this is part of how individual registration would look.

In a world with these centralised, consistent checklists/processes, etc, then there is no need for licensees beyond collecting our revenue, taking their clip and passing it on. And that anachronistic feature can be removed as part of a proper reform pathway.

Because you're entirely correct - there should only be one set of rules, which ALL of us follow. Not thousands of different little interpretations based on thoughts of this weeks compliance manager / consulting intern.

It is completely bananas.

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