AIOFP and consumers in chorus on keeping banks out of advice
The Association of Independently Owned Financial Professionals (AIOFP) has referenced research undertaken by Super Consumers Australia (SCA) as underscoring the need for the banks and major institutions to be kept out of the financial planning arena.
The SCA research was presented to the AIOFP’s annual conference last week, resulting in AIOFP executive director, Peter Johnston claiming that notwithstanding arguments put forward by the Quality of Advice Review (QAR) about adviser shortages, institutions should not be allowed back into the advice arena.
The AIOFP also noted concerns expressed by SCA that the Quality of Advice Review would not be producing an interim report for discussion before making its recommendations to Government – due to occur on 16 December.
In a message to members referencing the SCA research after the conference, Johnston noted that it had found that only 25% of Australians sought assistance from a financial adviser, 38% are disengaged with few assets and 37% are self-directed where they have direct property or other assets in self-managed superannuation fund (SMSF) structure of manged accounts.
“When you consider that we have around 18 million adults over 18 years, 25% of that is 4.5 million adults seeking advice then divided that by 15,000 advisers, you have exactly 300 clients per adviser,” Johnston said.
In doing so, ne noted that advisers could have up to 500 clients and that risk only advisers could have up to 700 clients.
The AIOFP’s comments come against the background of the Assistant Treasurer and Minister for Financial Services, Stephen Jones, have suggested he sees little likelihood in the banks returning to the financial planning arena.
Recent analysis by WealthData has underscored the fact that all the banks have exited the advice arena, but maintain a presence in terms of servicing high net worth via private client advisers.
AIOFP should be very careful getting into bed with fake “consumer groups”. These groups espouse a hard core ideology that does not work in practice, and ends up making consumers worse off. They are the enemy of advisers, and the enemy of most consumers.
The banks should never have been let into the Financial Services Sector 20+ years ago, just like they should not have been allowed to buy up all the smaller Banks, eliminating innovativeness, competition, and becoming “Too big to fail”; while having immense social and economic power, and the ability to easily pressure and “buy” politicians.
Australia needs [and needed 25-30 years ago] a quasi Glass-Steagall Act, to separate Financial Services from Retail Banking and Investment Management.
The G-S Act separated Retail from Investment Banking in the US for 60 years, since the Great Depression. Repeal of the G-S Act in the 1990’s very significantly help bring on the crises of the early 2000’s and the GFC, as the Banks immediately started rapaciously expanding into many other areas.
For the health and clarity of the financial system, functions need to be separated, much like APRA [prudential regulation] is now unwarrantedly invading ASIC’s space [product and advice] by intervening in product design {Income Protection, Super, etc].
Politicians and bureaucracies [and all humans] will always seek to expand their power, control, assets, and influence, while reducing competition – the imperative in a healthy society and economy is to stringently maintain those limitations, checks, and balances.
Banks see Financial Advice as merely a distribution arm, income stream, and support for their own products, not as a personal service, nor advice.
Unfortunately, politicians and bureaucrats are far too easily swayed, perverted, and pressured to submit to Banks blandishments and rationalisations, while simultaneously having little knowledge, experience, or vision in constructing a healthy, constructive, self sustaining, self regulating system.