Unscrupulous advice is in store

Compliance ratings, previous qualifications and experience should factor into whether an adviser needs to do further study or there could be a rise in unscrupulous advice as the adviser shortage worsens.

Leanne Bull, director of Bull Financial, said the demand for advice was at an all-time high, compounded by a shortage of advisers with levels expected to hit 14,000 in the next few years, according to the Association of Financial Advisers (AFA).

This issue, if left unaddressed, would lead to a rise in unscrupulous advice, according to Bull, as people would look to alternative channels such as social media or accountants who improperly advise self-managed superannuation funds (SMSF).

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“Accountants and SMSFs is probably some of the worst work I've seen in in my time as a financial planner. I've got numerous examples of people that couldn't get advice from us, gone to an accountant [who has] set up an SMSF for them and it's worked very, very poorly for them,” she told Money Management.

Bull posited that over-regulation had put affordable financial advice out of reach for many Australians and that the industry was under threat.

“Our industry is under threat, 75%-85% of my time is strategic advice, and I am sure that other good quality advisers would be the same. Our problem is that the regulator is focusing on financial product advice and a narrow introspective focus around review dates.”

In order to prevent experienced advisers from leaving the industry, she said the corporate regulator should factor in their prior education, experience, auditing reports and compliance ratings when determining if further degree qualifications were required.

In her submission to the Quality of Advice Review Issues Paper, Bull said: “More regulation and more study for study sakes only weighs down those aiming to do the right thing; it does not make the dishonest honest,” she said.

“I want extensive study present or past to be recognised regardless of its classification. I should be judged on my ability to do the job, not the year I did my study, if I have adequately ensured that I have maintained the skills and have a clean compliance record.”

Bull said her firm was 100% supportive of the lobbying agenda of the AFA, the Financial Planning Association of Australia, the Financial Services Council, arguing that at a minimum, the industry saw the following changes:

  • Uniform and standardised process for charging fees from platforms;
  • A revisit of the purpose, size and inclusions in Statement of Advice (SoAs);
  • Life insurance recommendations taken out of SoA environment;
  • Introduce 'Letter of Offer (LOA)' for simple advice;
  • More professional judgement less 'tick a box' compliance; and
  • Greater authority for financial advisers through MyGov and Centrelink (and better delivery).

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Dear M/s Bull,
Have you ever heard the words...It's a waste of time closing the gate after the horse has bolted !"
That's where we are today.
This conversation and opposition to the current mess orchestrated by various governments and ASIC that pandered to self interest groups like ISA, the FSC, Choice and others should have taken place more than 3 years ago.
Instead of weeding out poor behaviour by major corporations including some large life companies and fund managers, it was easier to bludgeon the low hanging fruit....the advisers.
Unfortunately it's way too late to have this discussion given the exodus of many experienced advisers as result of government's inability to understand the ramifications of their draconian legislation.

Very good response Aleycat.
But I like to go further with my response.
Leanne seems to think time in the industry is experience. Yes we have all done the neccessary CPD but this can be a tick the box approach in some cases.
A quick look at Leanne's education on FAR states that she has last completed a recognised course in 1998.
This was a reasonable qualification at the time, and no doubt it came with a CFP automatically which again was a relection of the time.
Nothing since. Not even a SMSF course to validate her experience in berating accountants for bad SMSF advice nor any membership of the SMSF association which most advisers have if they are dealing with SMSFs.
So sorry Leanne, you have not invested in yourself in the past 24 years. Or if you have, it is not significant to put on the FAR.
Our industry, yes industry and not profession, has not been viewed favourably to date.
Finally, inroads have been made with the education requirements which mean most advisers need only do 2-6 to six units at most.
It brings us all to constant and hopefully on the path to professionlism.
Education is a key componet of professionalism, along with experience and along with being a member of a professional body.
Sadly at this stage we only have associations, but hey, many to choose from.
The high education standards are necessary, as the hope as we become professional, the legislative issues will become less and perhaps as a profession we can beome self regulated which is a hallmark of a true profession.
When we are seen in this light by the community, the need for formal regulations should reduce, bringing the cost of advice down hopefully.
Regulatory oversight is inversely proportional to professional status.
But back to you leanne, are you on this journey as well?
Or will your resistance and those of a minority keep our industry locked in time?

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