Opt-in would magnify market dangers - Rantall
The market volatility of recent weeks has provided a prime reason why 'opt-in' represents bad policy with significant unintended consequences, according to Financial Planning Association (FPA) chief executive, Mark Rantall.
At the same time, Rantall has challenged claims by the Australian Securities and Investments Commission that a failure to implement opt-in might result in consumers paying for advice they don't receive because of asset based fees.
He said such claims by the regulator - contained in an answer to a Parliamentary question - were "nonsense".
The FPA chief executive made it clear that the close relationships which existed between planners and their clients were vital at times of market extremes, such as during the Global Financial Crisis and in recent days.
Rantall said it was the ongoing relationship between financial planners and their clients that enabled planners to act immediately in such circumstances and to provide advice and reassure clients, enabling them to make rational decisions.
"The proposed opt-in requirement could put at risk planners' ability to provide a critical response during crisis situations and market uncertainty," he said.
Rantall said clients should be given an annual opportunity to opt out of their relationship with their planner, but there were too many consequences associated with opt-in, including inadvertent exposure to investment risks such as superannuation contribution cap breaches and unmanaged investments.
AUTHOR
Mike Taylor
Recommended for you
Adviser losses this week are quadruple the same period a year ago, with the industry falling into negative territory for the last 12 months.
Colonial First State has announced the latest manager to join its Edge managed accounts menu, focusing on providing investors with a strategic income.
Rising advice fees has prompted Radar Results to increase its price guide to a minimum of $3,000 per client to reflect the changing shape of the adviser landscape.
Investment consultancy Ascalon Capital has appointed a new partner, who joins from 20 years at Zenith Investment Partners, as well as a new chief executive amid a “bold new chapter” for the firm.
