Would bulk billing bridge the advice gap?

Adding personal advice to Centrelink’s bulk billing framework and making advice tax deductible are some of the recommendations put to the Quality of Advice Review by a founding member of the Financial Planning Association of Australia (FPA).

In her submission reflecting her personal views for making financial advice more affordable, Julie Matheson, FPA board member on the finance, risk and audit committee, listed 59 individual regulatory steps an adviser must take to deliver advice.

Speaking to Money Management, Matheson said: “By my last count, there is now 59 steps to give advice in Australia without breaking the law or running the risk of breaking the law. And if you don't charge at least $5,300, according to the KPMG report, then you're giving pro bono advice or you're taking shortcuts.

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“That's why we need a bulk billing system to help us give advice to people who can't afford it.”

Matheson’s bulk billing model would be means tested, which she argued would be the most affordable and cost-effective way for Australian consumers to pay for financial planning advice under a schedule regime similar to Medicare Benefits Schedule (MBS), with payments coming from Centrelink.

“Registered financial planners/advisers have a fiduciary duty, just like medical practitioners, to put the Australian consumers' interests ahead of their own in law and the Code of Ethics and therefore deserve proper recognition in Government legislation and laws.”

She also recommended that Chapter Seven of the Corporations Act be replaced and that advice be made tax deductible akin to tax-deductible advice from accountants.

“Chapter Seven [of the Corporations Act] was initially created back in 2001 to help provide certainty in delivering products to the Australian consumer. But since then, it's been added to and added to, to try and stop certain behaviours or stop certain investments from causing financial ruin, and it's failed miserably.

“More modern methods of losing money has not been solved by Chapter Seven so that's why I think it should be replaced by a more modern version.”

Matheson said a tax deduction on average would make advice 30% more affordable, reducing the net cost to $2,719 per family group.

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Julie Matheson I respectfully but wholeheartedly disagree with you.

Medicare has not kept pace with inflation since Hawk/Keating introduced it in the 1980's - 40 YEARS AGO!!!

That is why medical practices, especially in the lower socio-economic areas are the equivalent of medical chop shops. Now provision for medical care for all Australians is a fundamental responsibility for government so don't confuse my point.

My point simply is, don't base our future direction on 40 year model whereby the only way to keep afloat is to run massive, five minute service practices where there is no holistic care, no care of the family lineage and no time to deal with someone's thoughts, feelings or concerns.

Surely with the benefit of hindsight we can do better?

I would be more in favour of the old CAR system. The fact find and the advice were contained on one simple document, one meeting and the client needs were addressed without 59 points of law to comply with to retain your license and not have your arse sued off you for minor indiscretions. Yes CAR's had their issues but a modern version of this could be inexpensively applied so that many more Australians could obtain advice.

How about we start with this idea instead?

I think I'm missing something..how does a 30% reduction on average through a tax deduction reduce a $5,300 advice Bill to $2,719?? (these are the numbers given in the article)

Thanks Phil for the comment. The article quotes the submission calculation: A tax deduction on average would make advice 30% more affordable, reducing the net cost to $2,719 per family group (example $3,885 - 30% average tax rate).

It was quoted..."By my last count, there is now 59 steps to give advice in Australia without breaking the law or running the risk of breaking the law."... if we're focusing on making advice tax-deductible and not the core problems, it really sounds like we're ignoring the elephant in the room, by not addressing the bad legislation impacting advisers. The majority of people I see, due to the generosity of the super system, don't pay tax or it's minimal and no amount of tax savings is going to help them.

A minimum 50% mass reduction in BS Red Tape and utter useless compliance rubbish Gordian Knot Government induced madness, is the only real solution.
Even better 75% cut of the Gordian Knot.
All the LNP, Hume and Frydenberg did was Add Massively to the problems, whilst smiling and telling Lies that they were trying to help.

The article quotes $5,300 as the price for advice, then jumps to $2,719 as the net cost after 30% tax deduction???? Nowhere can i see cost of advice as $3,885. If i gave asvice with nonsence calculations and disclosures like that id be rightly hauled over the coals

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