Intimate knowledge of advice vital to whoever heads Govt review

The Federal Government needs to appoint someone deeply familiar with the financial planning industry if it is not to avoid rooky errors coming out of its Quality of Advice Review.

A day after the Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume signalled that she would soon be announcing who would be heading up the review, industry participants made clear that such a person needed industry expertise.

They suggested that the lack of a detailed understanding of financial planning had handicapped some of the final recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Discussing the issue with Financial Newswire, Association of Financial Advisers (AFA) chief executive, Phil Anderson said he believed it was imperative that whoever the Government appointed to head up the review understood the financial planning industry.

“It is absolutely essential that the person has a detailed understanding of how financial planning works,” he said.

Anderson said that, apart from anything else, it would take time to bring anyone without that detailed knowledge up to speed.

Other financial planning licensee executives told Financial Newswire that they hoped that the Government did not make the mistake of selecting an executive from within the regulators to lead the inquiry.

“The regulator’s perceptions of how the industry works are very different to the way it actually works,” one executive said.

Advice IQ general manager, Paul Harding-Davis said it would save a lot of time and be beneficial to the outcome if the person leading the inquiry was someone who understood how financial advisers and the delivery of financial advice actually works.

“It would help if the person had specific rather than generalist knowledge of advice,” he said.

The original affordable advice review was to be conducted by ASIC but the Government later decided to broaden the scope of the review and hand the task to Treasury as the Quality of Advice Review.

The exercise also encompasses the future of the Life Insurance Framework (LIF) and is intended to traverse the future of both general advice and intra-fund advice.