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).
“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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