Time to let advisers use their professional judgement

The Australian Securities and Investments Commission (ASIC) has been told that financial advisers want to be empowered to use their professional judgement but for too long have not been trusted to do so. 

The Association of Financial Advisers (AFA) has noted that the ASIC affordable advice discussion paper has pointed to the ability of advisers to use their judgement to decide the scope and subject matter of the advice that a client is seeking, but said this needed to be more formally recognised. 

“We appreciate the point made in paragraph 29 that ‘financial advisers can use their judgement to decide on the scope of the advice in a way that is consistent with a client’s relevant circumstances and the subject matter of the advice the client is seeking’,” the AFA said. 

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“Financial advisers want to be empowered to use their professional judgement, and we believe that they should be. Many of them are highly educated and well qualified. Many have years of experience.” 

“It seems to us that for too long they have not been trusted to demonstrate professional judgement,” the AFA said. 

“We strongly favour moving in a sensible transition towards increase reliance on professional judgement, as is permitted by other professions,” the AFA submission said but at the same time noted that “reliance on professional judgement does require greater certainty and consistency”. 

“Principally, what is most important is for licensees and advisers to have confidence in their ability to use limited advice, and not to feel at risk that in doing so, they will be breaching their obligations.” 




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Congratulations to the AFA for finally making public what should be pretty obvious to all. Let's see how long it takes for the FPA to back its members who have passed FASEA, done their post grad and have decades of experience under their belt. More often now I'm finding myself in a room with BDMs, fund manager reps etc and realise I'm holding the highest education and experience in the room but still being addressed as if I was some peanut that just crawled out of the primordial ooze. Good article, Mike.

Ditto DN. Time for SOA's and ROA's to go too as well. Replace with a simple 2-3 page statement which outlines the advice, the basis of which is the professional judgement of the adviser. Maybe keep them for special cases such employees of product manufacturers, or where the product is an in-house service (eg. SMA, SMSF service) or a product where the adviser will earn a commission. But in all other cases, advisers should be able to use their professional judgement. Why should consumers be forced to pay for a costly document they will never read, designed for the sole purpose of satisfying faceless licensee compliance officers and ASIC bureaucrats who wouldn't have a clue about quality financial advice or what clients want from us.

Hi Everyone,

just wondering. what are the ASIC, fasea, and dealer group, super fund trustee mandated time for toilet breaks (both number 1 and 2) please?

do we have to get their free, prior informed consent (for you klutz who haven't passed the fasea exam it's std 4).

also, is taking a high-resolution photo of either number 1 and 2 and sending it to my group compliance officer for their approval and feedback a good way to satisfy myself that I am satisfied and have met the spirit of the CoE.

any assistance would be greatly appreciated. licensees and compliance officers' responses would be greatly appreciated.

thank you,

m.fin plan cfp(r), fasea passed

It's not just about using professional judgement in determining the scope of the advice but also the strategies being recommended. Removing the need to document all of the alternate strategies and products considered would significantly reduce SOA prep time. That's a meaningful change that could be easily implemented. When you go see your Accountant or Lawyer they recommend what they believe is the best strategy or course of action, they don't provide you with a detailed summary (including modelling) of the available alternatives.

I don't think a lot of Financial Planners have "Professional judgement" 1) why would you work for AMP or IOOF owned licensee etc etc and continue to place your clients second, so you can get cheaper licensee fees but then get brainwashed in a cult. 2) Why would you do the minimum education standards and think operating at the minimum is good for business, clients and your peers 3) why would think industry associations in the pockets of insto's would represent you..4) you kick up a stink when the Government intervenes and just blame the Government. Perhaps one set of rules for those that do have "Professional judgement" and another set for others. Or at least greater transparency. I'm sure you act Professional with clients and you think you're a professional but deeds not words.

Yogi, we know your not a planner let alone a Practice owner or else you would truly understand the plight of planners and AMP planners in particular. Keep your nose out of it and dont make comments that you do not know anything about. So go tell AMP you have been busted!

Pfft sit down, no one wants to hear your misguided bleats. There are plenty of bloody good planners in those dealer groups, and don’t forget that the advisers that have been around over 30 years have seen, learnt and advised on over 2000 changes in legislation to the superannuation and retirement framework in that time. Superannuation didn’t even exist when they started, so they’ve been learning new legislation on the fly forever and a day.

The trouble with this is AFCA. They will just award everything to the client in a complaint because professional judgement is subjective, and according to AFCA the client is never wrong, and Adviser should never make a minor mistake.

we aren't even allowed to have toilet breaks without getting approval from my professional standards officer at my licensee, forget about using professional judgment on the advice.

I give my group compliance officer daily updates on my bowel movement (BM)*. whether it was on time, small, medium, or large.

I also give them daily updates on my fiber intake. luckily as a young vegetarian with a high fiber diet, I am very regular

*A bowel movement or BM is the last stop in the movement of food through your digestive tract. Your stool passes out of your body through the rectum and anus. Another name for stool is feces.

the compliance people at my dealer group enjoy keeping track of my excrements as it reminds them of themselves.

Soon your licensee will be installing cameras and sensors inside your toilet bowl. They call it Regularity Monitoring Technology.

Also known as RegTech.

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