The Government’s new register of financial advisers has been given the thumbs up from industry stakeholders, ahead of its launch in March 2015.
Senator Mathias Cormann announced further details about the register last week, saying it would give investors, employers and the regulator confidence that advisers were appropriately qualified and experienced.
The financial services industry has been united in its praise of the initiative, although some stakeholder groups have questioned whether the measure goes far enough.
It is critical that consumers know as much as they can about the adviser they are considering engaging
According to Senator Cormann, the register of financial advisers will include:
- The adviser’s name, registration number, status, and experience
- The advisers’ qualifications and professional association memberships
- The adviser’s licensee, previous licensees/authorised representatives and business name
- The product areas the adviser can provide advice on
- Any bans, disqualifications or enforceable undertakings
- Details around ownership of the financial services licensee and disclosure of the ultimate parent company where applicable
It is estimated that the register will cost around $5million to set up, and will be funded through an increase to the lodgement fee for Australian Financial Services licensees.
Financial Services Council outgoing CEO, John Brogden, said the register was an important consumer service that the industry will be pleased to fund.
“The register will provide consumers with the relevant and important details of financial advisers so they can make informed choices.
“It is critical that consumers know as much as they can about the adviser they are considering engaging. We are pleased that the register will disclose the ultimate owner of the licensee and the parent company. This will ensure full transparency,” Mr Brogden said.
New Association of Financial Advisers (AFA) National President, Deborah Kent, described the register as a great outcome for consumers. She also congratulated the Government on the prompt turn-around time proposed, and the inclusion of advisers’ professional membership details in the register.
“Consumers will now be able to recognize the importance of professional membership of an association like the AFA, and understand that our members are accountable to the AFA Code of Conduct. This will enhance confidence that the adviser is working in their best interests,” Ms Kent said.
The Financial Planning Association (FPA) said access to key information about advisers would improve trust.
“This register provides better consumer protection,” said FPA CEO, Mark Rantall. “When you go to a financial planner you have the right to know you can trust the person you choose. This is a big step in the right direction.
It will also help weed out bad apples and provide protection for licensees
“The register will help people identify licensed financial planners with the best credentials. It will also help weed out bad apples and provide protection for licensees, employers and Australians seeking financial advice.”
Industry Super Australia similarly welcomed the announcement, but argued that it also needed to include information about the way the adviser is paid, and whether they are in receipt of any sales bonuses or other incentives.
“The principal piece of information consumers need is whether a financial adviser is exclusively paid by the client or whether he or she also receives sales incentives from product provider. This greatly affects the quality and impartiality of advice,” said David Whiteley, ISA Chief Executive.
Mr Whitely did not provide any recommendations on how this information could be disclosed, but said that all “remuneration practices” should be included within the register.
David Whitely is correct. If advisers are employed exclusively by an industry fund product provider to provide advice only on that industry fund and uses intrafund advice exemptions to skirt around industry standard documentation then the nature of that conflicted position should be made available to the public.
Regarding how an adviser is paid though, well the majority are self employed, you can’t escape the capitalist nature of our economy.. someone employed by themselves is going to want to be remunerated for their time.. sorry comrades.
Interesting if we are all going on about how we are paid then let’s do just that I’ve disclosed my commissions yes that dirty word for some reason since the year I started in the industry, it’s not so relevant but let’s disclose it all, what income does Davis Whitley get paid ? .
Is he not another third party? So let’s look at industry funds none of them are fund managers, they are all middle men compare the pair lets do that David for providers of services, no you don’t take commissions but you have changed that word to a fee.
How much money does management of an industry super fund get paid? And the ISA how does it get paid ? From industry super funds ? Funds used to benefit members only?.
And funding this new register the industry in in financial difficulty any way so let’s put it into more financial difficulty.
This over regulation has to stop, the education standards have been set by the ASIC gee I’ve got Three advanced diplomas how many can I have?.
Education a degree that’s not the answer you are looking for look around you the world is full of degrees.
Some advisers like Terry Franke who was banned for 65 breaches should never be allowed back in that’s wher we need to start.
The FPA AFA, ANZIIF are all costs to the public, Mark Rantell says education, financial planners must all have degrees, why? An SOA is now more complex than the human brain itself 60 pages of poly waffle. Some SOA,S 150 pages of more Polly waffle and it all costs.
I agree with both of the previous comments If we have to disclose fees commissions etc Lets start at the top with management. Why is it consistently so that the indistry funds and the mercanary unions that are associated with them are made to appear beyond re proach.
Lets “dig” a little deeper into their finances and see what raises its “ugly” head.
Over regulation is an understatement tell me one industry where a self employed person HAS TOO disclose in a contract what they are receiving fee or commission or at all. i had an extension put on my home recently and although i did my homework on the quote materials to be used etc i did not see anywhere where the contractors profit was disclosed ? .
Some very distinquished “late” colleges would turn in their graves if they could see the mess our great industry is becoming.
Will this included authorised employees who only give general advice?
Great rules we live with. The bad guys get rapped over the knuckles and go sell real estate or cars or something else. The honest and competent career advisers get more and more red tape, ‘protecting’ their clients against things that will never happen. Imagine a society where accountants, doctors, lawyers and the like also had to continually justify their every action (in writing) against the previous sins of their industry’s crooks and incompetents. It would certainly make it easier to second guess their actions at a later date. Back to the register… This does have potential if used sensibly. It will allow the industry to recognise the good guys – the advisers who have spent decades looking after clients without a problem. This could provide the means whereby those advisers not only get recognised but rewarded by being allowed to operate without an assumption of guilt in everything they do (just like every other profession). Who knows, maybe one day the great advisers will be permitted to operate with the same levels of trust as the newly employed kids giving advice to industry fund clients and the like.
Wow. It’s obviously time to dissolve what is known as financial advice and leave clients to their own devices. We are all liars , cheats, thieves and rogues. No other industry is required to undergo such ridiculous scrutiny and justify every piece of advice to a client in what is known as a book (SOA). No other profession is required to flag all of their qualifications to clients prior to undertaking work on their behalf. To be able to give advice you need to be licenced or an authorised rep. It’s funny but I believe you only get to that level by satisfying all of the necessary requirements. That is proof enough of your credentials to operate as a financial planner. My clients come to me because they trust me and know I will put their interest first and foremost. I don’t need some sanctimonious souls telling me to do a professional job on behalf of my clients. I wouldn’t be in business if my clients believed I was a liar , cheat, thief or rogue. When is this Spanish Inquisition going to stop to allow professional planners to get on with their job of looking after clients and not worry about covering their backside. Enough is enough. When are the people in charge of looking after our interests going to do their job instead of joining in.
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