August 7, 2018
Financial institutions and regulators are standing in the way of client-centric reforms, and moves to license individual advisers, in a bid to retain control and promote their own self-interests, according to Connect Financial Service Brokers Chief Executive, Paul Tynan.
Tynan said the Royal Commission and FASEA education proposals will continue to reshape the industry and any change should be focused on putting clients first and moving away the dual level AFSL/adviser licensing system towards licensing advisers.
“This single change will re-energise and refocus the profession, however regrettably this is currently hitting a very major roadblock,” Tynan said.
“The institutions and ASIC are not embracing this client first principle and pushing back as they see this as losing control and is not in their self-interest,” he added.
“I have lost faith in the captains of industry and regulators to put self-interest aside…”
Tynan said key industry leaders were failing to see or admit there was a conflict of interest between advice and product and continue to build advice models based on size which allowed them to compensate consumers for bad advice.
“I have lost faith in the captains of industry and regulators to put self-interest aside and place the welfare of the client first above all,” Tynan said.
He said financial advice was currently caught in a ‘perfect storm’ in which there was “a total lack of understanding and appreciation of the role and importance of the advice sector”.
Tynan added that this disregard when combined with the growing cohort of older advisers, increased education requirement and over compliance and regulation would result in “…an exodus over the next six years of more than 50 per cent of the current force of financial planners”.
“The number of financial planners that will leave the industry cannot be understated and yet the severe impact it will have continues to be ignored,” he said.
The advice sector would, however, struggle to attract new advisers, Tynan said due to “…brand damage and a long and complicated pathway in order to become a fully qualified”.