Industry funds back making personal advice sole domain of planners
Industry funds and the major financial planning groups have found common ground – neither of them wants financial advice opened up to non-relevant providers.
The common ground was made clear in the Industry Funds Services (IFS) submission to the Quality of Advice Review which not only expresses concern at the dearth of financial advisers but states bluntly that non-relevant providers cannot be allowed to provide personal financial advice.
After years of campaigning for measures such as the Future of Financial Advice (FoFA), the IFS submission has stated: “Good personal financial advice is well proven to improve financial outcomes for recipients, and IFS supports efforts to reduce its cost and increase the number of Australians able to access it”.
“It can also be complex, impactful and, in the wrong hands – incredibly harmful to consumers,” the submission said.
“The primary issue impacting the ability to provide more personal advice is supply of qualified financial advisers. While nationally there are over 85,000 lawyers in Australia – there are only 16,500 financial advisers. This constrains supply, drives adviser salaries up and ultimately increases the end cost to consumers.”
“Whilst the number of persons providing personal financial advice needs to increase – this cannot be through a proposal which would allow persons who are not financial advisers (Relevant Providers) to provide that personal financial advice,” the submission said.
“The past 20, and in particular 9 years has seen a strong push by Government, industry and community expectations to transform financial planning into a cohesive, recognised and trusted profession. We have made much progress – but much remains to be done.”
“The proposal to allow persons, who are not financial advisers, to provide personal advice – entirely undermines that progress, poses unacceptable risk to consumers and, is in itself counterintuitive.
“Consumers have a right to expect that when a person provides them with personal financial advice, regardless of how they pay for it, that person is a Financial Adviser. A professional, who is registered, qualified, experienced and subject to a professional code of ethics requiring them to act in their best interest.”
“The proposed model does away with that where personal advice is either not paid for, or paid for indirectly (i.e. intrafund). Even the simplest of free financial advice today provided by Financial Counsellors is done so through a framework, where those counsellors must be accredited members of their industry bodies, qualified and subject to a code of ethics.”
“While the proposal to introduce a ‘good advice’ duty is well intentioned – it does not replace a qualified financial adviser. Its utility is also entirely dependent on how it is defined, understood and enforced.”
“Importantly, it cannot be a watering down of the existing quality expected of financial advisers.”
“Removing the vetting the framework applies, the conflict of interest provisions and in particular removing entirely the code of ethics and obligation to act in the best interests of their client, is an unacceptable winding back of consumer protections, in a time where the industry continues to see millions in consumer compensation paid, and its bad apples weeded out by ASIC on a weekly basis.”
“To draw an analogy, the proposal is akin to proposing that legal advice or tax advice be provided by persons who are not legal practitioners, or tax agents, as long as that legal or tax advice is ‘good’.”
“It is the hallmark of all professions, that they are restricted and the services they provide can only be provided by members of that profession, suitably trained, experienced and registered. Why is financial planning thought of differently? If we are to successfully turn financial planning into a profession – we must stop treating it differently to other, existing professions.”
Wow. Would not have expected that.
Either union funds have seen the light, realise it’s not as easy as banks, insto’s and IFS thought to provide advice, want to keep running fox in the henhouse campaigns or care about their customers?
I don’t know but endorsing wholeheartedly a union fund statement was not something I thought I’d be doing.
No matter the motivation, thank you IFS.
They are just being accountable, which is refreshing and shows good governance. Some months ago and more, IFA and others like Q Super have said that they are not built for the delivery of bespoke financial advice. They simply don’t have the systems to provide personal advice and related financial services. That is evident in fact if you know how they operate. If we are properly recognized and the classification between an intra-fund superannuation officer and financial adviser is distinguished into title & law, then we might be able to move on and forget about the past … see how we go
Great news and support, finally a consolidated view! It does make sense, in that ISF have invested quite a bit in people and processes for registered Financial Advisers to provide Intra Fund and scaled Advice. If the non-relevant providers provisions were passed, it’d open up the competition for Banks Insurers and Retail funds to compete with inhouse sales on the cheap (and nasty).
Don’t be naive, a leopard doesn’t change it spots. Union funds hate financial advisers, always have, always will. Their comments are really about not wanting increased competition from unlicensed sources because they are happy with their intra fund carve outs they operate under. They like the ability to provide conflicted, poor quality advice and don’t want others getting in on it.
Who is naive? Many industry funds are now in fact referring members to external advice groups, and most funds employ their own advisers. Super Funds have in fact embraced the value of advice for some time in my opinion.
What’s the angle her from ISA? To keep burying adviser in red tape and reducing competition while they go on to use robo-advice, call centres? I find it suspicious as to why they now champion advisers when for the last 20 years they have bagged them out with TV ads and other media.
Within the article they (ISA) never suggest a solution either.
Agree 100%, there is an ISA Hidden Agenda here.
Goes along with the rivers of gold they already receive from every member to pay Hidden Commissions for mostly NO Service under Intra Fund Sales.
Definitely Suspect ISA behaviour
If you expand general advice (or whatever it is called going forward) to the point that it cover’s 99% of all advice and leave the remaining 1% as personal advice then limiting personal advice to licensed planners does not take any money away from the Industry Super Fund’s. They will play the long game, as will banks. The government will as always roll over when donations are involved.
It is hard to imagine that they don’t have some “angle” here… I wonder now if they will abandon the Intrafund carve-out based upon such a stance, because the limitations to this advice makes it inappropriate for most clients.
In any case, if Industry Funds start working with us (and I guess, some have started to) maybe we would also consider working with them for the clients in the right situation.
The simple fact is… Product providers and Unlicensed Individuals and organisations should all be excluded from being Relevant Providers and should not be providing advice.
The problems with the SOA should still be simplified though… the document is still mainly for compliance and ASIC, not the client!
So, IFS come out an fully back the advice profession and yet still get criticised by some of those whose cause they are directly championing? Odd.
Actions speak much louder than words