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
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
