FPA Warns Against Over Regulation

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The Financial Planning Association (FPA) has warned against the over regulation of the financial services system, saying it has the potential to inflate the cost of advice and discourage Australians from engaging a financial adviser.

According to the FPA, the Investment Trends 2010 Planner Business Model Report identified a critical disconnect between the perceived and real cost of advice.

It is imperative that we address the gap between what consumers think advice costs, and what advice really costs

“It is imperative that we address the gap between what consumers think advice costs, and what advice really costs,” said Mark Rantall, FPA CEO.

“The initial engagement agreement between an adviser and their client needs to be very clear and comprehensive.  We need to educate consumers about the processes involved in developing and implementing a comprehensive and ongoing financial plan.

“If financial planners are not able to increase efficiencies under current legislation then it may be difficult to provide advice at an acceptable price,” Mr Rantall said.

According to the FPA, the report findings are just one of a number of challenges the industry has faced during the past year.

“It has been a tumultuous year with many businesses emerging from the GFC, numerous Government reviews and initial uncertainty surrounding the outcome of the Federal Election,” said FPA Chair Julie Berry.

Despite the challenges, the FPA reports it experienced significant growth in membership in the 20o9/10 financial year, with over 1,000 new members joining the Association.