The Federal Government has been warned that imposing a compulsory ‘opt-in’ with respect to financial planning risks fundamentally separating advice from the commonly accepted client/provider contractual relationship which underpins virtually all commercial activities in Australia.
A panel of four of Sydney’s most senior and experienced financial planning identities told a Financial Planning Association (FPA) luncheon yesterday that the proposed ‘opt-in’ arrangements flowing from the Future of Financial Advice changes carried with it significant fallout, including impacts on the valuation of businesses.
Planning principal Daniel Molesworth said imposition of ‘opt-in’ could ultimately generate an exodus of financial planners, leading to shortages and therefore driving up the cost of financial advice.
“Clearly those financial planning businesses which cannot administratively handle opt-in will be most affected,” he said.
Eureka Financial Group’s Greg Cook described the opt-in arrangement as a “bridge too far” and asked why, as a financial planner, he should be forced to have a different commercial relationship with his clients to that which accountants and lawyers maintain with their clients.
“Why is the Government making us reactivate that relationship each year?” he asked. “Why is the Government interfering in a commercial relationship?”
Fiducian chief executive, Indy Singh said he did not support ‘opt-in’ because he believed clients needed advice consistently and immediately.
“This places unnecessary stress on planners who already have a contract with their clients and I do not know how the Government can interfere with that contract unless it is unlawful or fraudulent,” he said.
Singh said the Government’s proposals were “high handed” and represented an execution of the agenda of the industry superannuation funds.
