Advertisement

The Case for Individual AFSLs

Should all financial advisers be individually licensed?

  • Yes (59%)
  • No (30%)
  • Not sure (11%)

Our latest poll asks whether you believe you and your adviser peers should become individually-licensed.

This question stems from a call made last week by Connect Financial’s Paul Tynan, whose key motivation in making this call relates to how the industry should be addressing what he sees as an inherent and significant conflict of interest.

Tynan believes it’s inevitable that individual adviser licensing will become the preferred model in future (see: Call for Individual AFSLs…). If this prediction eventuates it will mean the advice sector is set for more fundamental change, and we’re interested to know what you think.

Leaving aside for a moment how this change would impact current licensee firms (other than ‘own AFSL’ entities) and institutions who own distribution, the reaction we received to last weeks’ article has delivered differing viewpoints. One view effectively adopts the position that ‘if it ain’t broken, don’t fix it’, while the other supports the notion of individual AFSLs as a solution to addressing what is perceived to be a fundamental conflict of interest relating to which platforms or (by implication) which life insurance products the adviser can and/or should recommend to their clients.

There’s plenty more we could say on this topic, if only because of the impact such a fundamental change to the sector would imply. But we’d welcome your own thoughts on what you think this would mean within the financial services landscape…

  • alistsir

    Certainly. In the USA, advisers can have either or both a State issued licence for Life products including Annuities or a Federal licence for investment in Securities such as managed funds equities etc. What does a licensee here in Australia do for the adviser. Apart from attending to compliance matters…not much else for the clip of the ticket. Fresh thinking is needed all round and this would be a good start. Tax advisers and Lawyers do this now as do doctors builders etc. If we are to be a profession as everyone would like us to be, then its high time.

  • Jeremy Wright

    With every change, comes complications, more compliance and red tape.

    Advisers are already struggling to keep up with the avalanche of change, combined with an upcoming, reducing revenue stream and a public that are tightening their spending, which will further impact on what they will be prepared to pay for Insurance coverage.

    Every idea has merit in one form or another.

    The difficulty lies with incorporating that idea into the bigger picture and foreseeing the implications, both positive and negative.

    I think we are so focused on change for change sake, that people are not asking the obvious question, which is;

    Knowing there is a huge Under-Insurance problem in Australia, will this idea help solve this, or exacerbate it?

    There are now thousands of public servants, left wing loonies and big Business Lobby groups, out there beating their drums, which is drowning out sensible debate and the ability to question inaccurate data and down right lies, perpetrated by self interest groups who have a lot to say, with little verifiable proof to back up their assertions.

    Paul and all the people who have strong opinions, if you are going to espouse your views, then look past your idea and explain how it is going to address the overriding issue of Under-Insurance.

    • alistsir

      Jeremy I agree with your sentiments. But I ask. Is what we have and are going through providing any solution? How history in solution finding so far has not made any real improvement and in fact many would argue we are going backwards. After all, can you tell me what does best interest mean. Is it for the client, government, banks or ideology and what is churn as opposed to best interests? So far, the only winners appear to be from the fiasco created by Canberra are the larger financial institutions with self interest as their drive and their political ilk to do their bidding not to mention the ISN who seem to slander IFA’s and are not transparent while the person that matters most in this debate, the consumer, is largely ignored.
      Tying up an industry in red tape, playing pretend to fix problems only to make matters worse is never the answer.
      If we are true to helping the consumer after all, then allow transparency across the industry, clear concise advice to be distributed and prosecute those who transgress best interest. This includes not just the mere adviser but also those running institutions and their senior management. Remove conflicts, including bonuses based on sales of product once and for all. Prosecute companies including public companies and their management for transgressing simple consumer law.
      Proper targeting with the intention of stopping bad practices needs to occur.
      Is it not strange that despite some 9 inquiries, task forces, committees, consultations, ASIC, our associations all having input at all levels that we have a mess of an industry with the only solution is more and more red tape. A fool can try creating more red tape but they are still a fool.
      Our industry has now been told to increase qualifications or else going forward. ASIC put forward an SOA on risk while no SOA from ASIC exists on investment or SMSF advice or any other form of advice for that matter. WHo is driving this idea. Perhaps institutions again. Ah yes, self interest at work and our industry simply goes along with it.
      We need a fresh approach but those in charge clearly ought not be part of the conversation. Their ideas are old and tired. All drinking from the fountain of she’ll be right mate. That same drink with its sedatives putting us to sleep.
      Jeremy, a fresh start with transparency and common sense would be terrific. Just hope we get their before my grandchildren arrive. FYI I have 2 kids aged less than 10 !!

  • Old Fella

    Individual licensing will come. The Best Interests Duty puts the responsibility fair and square on the shoulders of the adviser, no longer can we if challenged on our advice rely on the Licensee to back us up by squealing “I kept within the Licensee’s rules.” With all the past bonuses, platform fees etc disappearing, from the Licensee’s point of view, how will they ever make a profit in future?