Restrict use of the word ‘advice’ unless that is what it really is

It is time to get the word “advice” out of the equation with respect to “general advice”, “intrafund advice” and “robo-advice”, according to the AMP-focused, The Advisers Association (TAA).

TAA chief executive, Neil Macdonald has issued a statement declaring that it is time to address the issue of financial product information being called “advice” when it is not.

“We believe that terms such as ‘general advice’, ‘intra-fund advice’ and ‘robo-advice’ are typically financial product information services, and it is therefore potentially misleading and deceptive to call them anything else,” Macdonald said.

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“In the interests of consumer education and transparency, it is time to call spades, spades.”

He said that was why his organisation was calling for the term ‘intra-fund advice’ to be renamed 'intra-fund information' and ‘robo-advice’ to be termed 'robo-information'.

"Our preference is to remove the term ‘general advice’. When FSR was being introduced ‘Financial Product Information’ was proposed, which is a more accurate description," Mr Macdonald said.

“As we in the financial advice profession know, true personal financial advice has to consider and meet the client's best interests obligation and includes an extensive process which involves investigation of the client’s needs, detailed analysis of their circumstances, research into the most suitable products and services to meet those needs, development of a strategy and the production of a statement of advice that outlines solutions to help them meet those needs,” he said.

“This extensive process is not followed by those providing general advice, intra-fund advice or robo-advice. It is essential that those financial product services are renamed, so that they are not mistaken by consumers for personal financial advice.”

Macdonald said renaming the terms would also help level the playing field for financial advisers.

“At present advisers are subject to much stricter rules and disclosure requirements than those providing financial product information and the FASEA code makes it hard to provide scoped or scaled advice,” he said.

“In cases where financial advisers are simply providing financial product information, then in order to level the playing field, they should receive the same concessions as other financial product information providers.

“This would enable more everyday Australians to get their straightforward questions about a product quickly, simply and easily answered."

TAA's call for clarity around the terms was included in its recent submission to ASIC's affordable advice review.




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Comments

Comments

Well done Neil and the TAA. Great initiative to shine the spotlight on the term "Advice". The Corps Act 2001 has a whole chapter (Chapter 7) on providing "Advice" yet it seems anyone can give it, except registered financial advisers. It takes 59 steps to provide one piece of "Advice" in Australia without breaking the law if you are a registered financial adviser, ref ASIC FAR.

Hear, hear!! Well said Neil. Let's hope other associations pick up on this issue and present a united front.

All this matter is about is for Industry Funds to pay their marketing reps $100 million a year in salaries to roll funds into their funds & soon for their marketing reps to set up Pension funds with SoAs.

This is exactly what they & ASIC want - to force retail financial advisers jump through so many more hoops, which results in increased costs, which many may no longer be able to afford - usually the very people who need financial advice. Whereas ASIC & the Industry Funds want institutional "information providers", who are paid via hidden admin costs, and could care less that fund members won't have the opportunity to ask for individually tailored advice.

Retail advisers need for the playing field levelled so the big institutions are held to the same standards, and that the unrealistic limitations on individual financial advisers are more realistic and customer-friendly.

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