Advisers Opting Out of Opt-in

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Does the introduction of a statutory fiduciary duty to act in the client's best interests overcome the need to introduce client opt-in measures?
  • Yes (77%)
  • No (19%)
  • Not sure (4%)

Most advisers believe there is no need for client opt-in provisions within Future of Financial Advice reforms, according to our latest poll.

In response to the question:

Does the introduction of a statutory fiduciary duty to act in the client’s best interests overcome the need to introduce client opt-in measures?

  • 76% of advisers agree
  • 20% disagree
  • 4% remain undecided

Based on a number of responses provided by advisers, this voting outcome may reflect a more general objection to the principle of opt-in itself, rather than whether statutory fiduciary duty makes it redundant.

The general tone of many responses we have received relate to why opt-in measures will be a burden for advice practices and/or the fact that effective opt-out processes currently practised by many advisers achieve the same protection for the client intended by opt-in.

Other comments, however, address whether advisers have properly thought through the implications to their practice of statutory fiduciary duty and the penalties that may be involved if the adviser may in future be found to have breached the legislated guidelines:

the planning industry generally doesn’t fully understand the current situation, or the proposed reforms

… the reason why riskinfo has said “they (the advisers) have voiced little to no objection over the proposed introduction of a statutory fiduciary duty requirement that advisers act in the best interests of their client” is because the planning industry generally doesn’t fully understand the current situation, or the proposed reforms.

But here and elsewhere, there has been little connection made between the intended protection afforded the client by statutory fiduciary duty obligations and what may then be seen to be un-necessary or redundant processes required under the opt-in provisions.

But either way, tell us what you think.  Should both fiduciary duty and opt-in be established in order to properly protect the client’s interests?  Or do current regulations already achieve this?  Does fiduciary duty make opt-in redundant?  Or is it more a case that most advisers simply don’t want opt-in under any circumstances?



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3 COMMENTS

  1. I doubt any planners would object to fiduciary duty obligations. The majority would currently satisfy these I would have thought. As a consequence, the concern is related to the Opt-in provisions.
    The biggest hurdle to opt-in, is getting the consumer to accept that what they are receiving in service committments is worth the money they commit to paying the planner. As we all know, in times of financial trouble, one of the first things to get cancelled in order to reduce costs is insurance premiums. If consumers think that this is acceptable and ignore the risks, it is no surprise that they ignore the risks of not having annual reviews, attending seminars or spending some time and money on looking after their financial well being.

  2. Why is OPT-IN an issue for advisers…aren’t advisers meeting with all of their clients at least once a year (or at least having a long phone conversation) – ie if they are being paid shouldn’t they be advising their clients and be in contact with them -…to ensure that their client’s plans remain on track…if so, then this is a perfect opportunity for client to sign a fee renewal form…and for the client to renew their confidence in their adviser!

    What is all the fuss about.

  3. I would think that most planners feel that they are acting in the best interests of their clients hopefully at all times. So the idea of a fiduciary duty to do so seems a little redundant to me and something that I would not be worried about.
    I have quite a lot of fee for service clients who are not paying such things as trail commissions and most of these clients I meet face-to face about twice a year but I can be and often am running about 2 months behind with this. What would be the ramifications of the opt-in rule if I don’t get them signed up in the 12 month period for the next year? How much grace are we going to get? Would I have to cancel the fee for service arrangement until I see them again and then restart it? What happens when customers are away on a couple months holiday and this is when their annual review falls due? I think there are a lot of grey areas which could be massive in terms of administration and pretty scary from that point of view.
    I really don’t see why we need an opt-in rule. Aren’t clients able to decide for themselves if they are receiving a service that they are prepared to pay for. Isn’t it enough that Fee for Advice is a much more upfront way of charging people rather than commissions which can be hidden and forgotten about. Fee for Service in my experience is pretty in your face and shown on statements, transaction histories etc. so is clearly visible.
    It seems that the govt. is preparing to treat customers like idiots and planners like sharks who need to be blocked at every pass.
    Why is it that our industry is being targeted over and over again. What about Stockbrokers, Real Estate Agents etc?

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