Financial planning costly and complicated, say review submissions

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A review of the financial advice sector seeking to cut red tape and provide affordable advice could lead to more regulations and further reviews, some analysts are predicting.

Industry commentator reports that the current Australian Securities and Investments Commission (ASIC) affordable advice review may just be the precursor to “a broader, independent review of the legislative and regulatory environment covering financial planning”. Part of the reason for that view was because ASIC is “arguably a stakeholder in the process rather than an objective, independent party”.

Association of Financial Advisers (AFA) general manager, policy and professionalism, Phil Anderson, says the ASIC review “could only achieve so much”.

“Taking the lead and trying to fix many of the issues raised in terms of legislation and regulation will require much, much more,” he said.

The AFA says advisers are hamstrung by current rules, which make it “almost as expensive to deliver limited advice as it is to deliver holistic advice”.

The Self-Managed Super Fund Association (SMSF) agrees that financial advice services are too costly and complicated. Chief executive John Maroney said: “After nationwide consultation with our members, the association has found that the advice process is lengthy, costly and prioritises compliance and the needs of AFSLs (Australian financial services licensees) over consumers.”

The Stockbrokers and Financial Advisers Association (SAFAA) wants more flexibility in the provision of financial advice.

“Consumers want different advice for different needs and the regulatory environment needs to accommodate consumer preferences and requirements and not seek to shoehorn all consumers into one advice service,” said SAFAA chief executive Judith Fox.

“The current complex and volatile market conditions highlight the importance of accessible and affordable financial advice.”

SAFAA says ASIC’s inconsistent approach to advice is a barrier to consumers receiving limited advice.

“While SAFAA does not consider that changes need to be made to the law concerning limited or scaled advice, it is of the view that ASIC should reconsider its conflicting views on limited advice and ensure its reports to licensees are consistent with the provision of limited advice.”

The assistant minister for superannuation, financial services and financial technology, Jane Hume, says financial advice has a critical role to play in Australia’s economic recovery from the recession.

“I am constantly looking for opportunities for red tape reduction, identifying obstacles to productivity and profitability, and reducing the burdens on your industry and its participants,” Senator Hume said.

“I’m not afraid to say that the government has a vested interest in ensuring that you can provide financial advice to as many Australians as possible without being tied up in red tape.

“The government is focused on supporting the advice industry with fit-for-purpose regulation, while maintaining consumer protections. We know that some interpretations of current regulatory settings are creating barriers to consumers seeking good-quality, affordable personal advice,” Senator Hume said.

“The government supports a well-regulated and vibrant financial advice sector that supports advisers seeking to help Australians make informed decisions about their personal finances and to make better use of their savings in retirement.”

Are you happy with the financial advice you have received? What would make financial advice easier for consumers?

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Written by Will Brodie


Total Comments: 4
  1. 1

    “Are you happy with the financial advice you have received? What would make financial advice easier for consumers?”

    Yes, we’re quite happy with the financial advice we received. Firstly, the initial interview was with our super fund and was free. We were given things to do to increase our fund and a budget to follow with a return date of 12 months. The second interview turned out to be free as well. We were told that we could have one free review each year but the “free” bit was after we paid an annual fee to cover it. The information we were given at the “free” interview was available on the website so we cancelled the interviews and stopped paying a 1% fee.

    Our super fund pays salary, not commission, so there is no incentive to push a product and I think that financial advice should be independent. Those super funds run by parties who steer members to the company products, which may not be as profitable as others, should be banned from the industry. Most people who see financial advisers are not familiar with the investments level of super funds and may be easily confused.

  2. 0

    The objective of a financial advisor is totally the opposite to the investor. The goal of the financial planning industry is to slowly, over time, transfer the investors funds to the financial planners and their ‘retail masters’ in the form of relentless, ongoing fees. Do yourself a favour and invest in low cost Index Funds and keep the advisors greedy hands off your hard earned cash.

  3. 0

    The problem with financial advisors is whether you earn money or lose money they still get paid, obviously the more they earn for you the more they get paid, plus several funds have two charges one for a financial advisor and another for their administration of your fund.

  4. 0

    In 2019 while recovering from cancer I sought financial advice from an “indepedent” advisor. I presented the adviser with a specfic brief set out the outcome we were seeking. After a couple of meetings where he assured us he could achieve outcomes we were seeking within a risk profile. We went ahead with the SOA. On delivery we found that almost every page had a diclaimer as to the “advice” printed on the page. The final page contained the sting in the tail. The final statement said to the effect that by drawing down the yearly amount specified we would likely exhaust all capital in the super fund before the end of our lives.
    The adviser expected us to pay him 1.1% of capital per year for the privilage to tell us we are screwed when the investments fail. Needless to say the SOA was returned without payment.



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