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.
“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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