Many advisers feel they are being backed into a corner by unions and banks following the release last week of the Government’s ‘Future of Financial Advice’ reform package.
Responding to our latest poll question:
Do you support the Government’s ‘Future of Financial Advice’ reform package?
86% of advisers have said they do not support the reforms or only support some of the elements (45% reject the reforms outright and 41% support some elements).
Based on adviser comments we have received, we sense that those only supporting some elements of the reforms are saying they agree with the intent of most of the reform package but are against the banning of commissions.
There appears to be growing frustration amongst many advisers that the ‘big end of town’ has got its way and that instead of the reforms leading to a more transparent, independent structure where the client’s interests are paramount and financial advice will become universally accessible, it will instead lead to an advice agenda where union and bank clients will be channelled into the products they manufacture and control:
[The Government] have been wrongly influenced by industry funds…
The problem is not remuneration by commission; the real problem is product supplier’s ongoing control of the advice industry
Product control of advice ensures that advice will remain incidental to product sales and not be universally available
Expansion of intra fund advice plays into Industry Funds and large institutions hands
The advisers are dead right. Every bank will now simply hand their clients through to the product provider that they own
On the banning of commissions:
… there will be a tendency in the future for advisers to concentrate only on the middle and higher income earners
I have a concern that there will be a tendency in the future for advisers to concentrate only on the middle and higher income earners and so for many people who need advice will possibly miss out
…the most conflicted remuneration structures of all are salaries paid to advisers employed by product suppliers to push their products
The mum and dad businesses and the lower income earners who need the best advice will in most cases be unable to pay for it
I cannot work out a formula to charge fees with risk insurance and cannot understand how the government or financial advisers can! The commission I receive, covers setting up the cover and ongoing service including Claim work with no extra fee/cost to client
As a Risk specialist the impact on my business is minimal at this stage, however goodbye to the Mum & Dad clients & small business owners if Risk payments are removed as well
But will this generally negative response to the Government’s financial advice reforms package be seen over time to be an over-reaction?
Will this reform package simply be another step in progressing the financial advice industry into one that is perceived by consumers to be a profession?
We want to know how you see the future of financial advice in the coming years. Our poll remains open …
I met with management of a large industry fund a couple of weeks ago and they told me that their greatest issue is drop off of clients when they neared retirement. They find that when members approach retirement that they want to take more action on their superannuation and more often than not meet with a financial planner and exit the fund.
The industry fund has recently set up an advisory business in order to attempt to retain some of these older clients however charge upfront fees as they do not technically receive any commissions. They are irritated that Financial Advisers can charge commissions on other funds and therefore become more appealing to their members as they do not have to pay upfront fees. There are obviously many other benefits that Financial Advisers can offer their clients in fully disclosed, tax beneficial retail funds.
We hear rumours about the ownership and benefits that unions receive from industry fund ‘profits’ however this is never disclosed.
Will we ever see this disclosure?
Are the current ‘reforms’ a way for unions to retain their industry fund members by cutting out the financial adviser?
This is politics and politics is the art of doing nothing while giving the perception that you are doing something while pandering to those who have power. In this case the Unions and the Big End of Town (Banks and Fund managers). It’s easy to bash the little guy (us) because we have no political clout and have a perception of being the bad guys. ASIC is a useless waste of space, good at coming along after the fact or bashing up easy marks (remember the Tasmanian adviser?). I would be interested in seeing a response from advisers who have reported real crooks to ASIC who have then done nothing abount the complaint. I personally can give many examples. Did ASIC know about the operations of Storm – yes. Did CBA know about the operations of Storm – yes. Nothing happens in isolation however it seems that advisers are the ones to be isolated. Personally it’s time to fight back and I for one will be joining a rival political party to aid in the demise of those who have offended me. Don’t get mad get even.
Every time something goes wrong, or the government needs to be seen to be prro-active, they come down on some-one, and make a big name for themselves.
And what do you expect when you have a Labour government, which is full of union members, getting their way.
And the big end of town, (read financial instituions) have done nothing to support the adviser. But then they never have!
They have always cowered away in the background keeping quiet lest they rustle the leaves and get noticed!
This current givernment is not only hopeless and riven this country towards future debt, but drive small businesses into the ground.
When will the union.industry fund reveal their profits, because they couldn’t continue without making any!
And when the government wants bigs pays to the big end disclosed, where is the disclosure for union /industry fund leaders!
It’s all one way, and most of this country voted for it! You twits!
I’m glad to be out of it.
Product groups (both retail and industry fund) have supported the reforms regarding no commissions for financial advisers, because this will reduce competition and help those product groups further consolidate control of the advice industry.
The Industry Funds agenda is to remove intermediary advisers altogether, and even the retail product groups would happily see the back of ‘pesky’ advisers who give unbiased advice.
Continued product control of advice ensures that advice will not be in the best interests of the consumer, because it remains secondary to the placing of products by the adviser.
Continued product control of advice also ensures that advice will remain incidental to product sales and not be universally available. No sale no advice.
The consumer associations need to wake up and understand what is really happening.
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