Advisers have overwhelmingly rejected the notion that the introduction of opt-in measures will reduce the cost of financial advice to consumers. They believe the opposite will be the case.
In answer to our question:
To what extent will the introduction of client opt-in measures have an impact on the cost of advice to your clients?
84% of poll respondents said they believe opt-in will lead to either a higher or significantly higher cost to client. Only 6% said opt-in will lead to lower or significantly lower client fees, while the rest believe opt-in measures will have little impact on the cost of financial advice to clients.
Many of the comments we received from advisers in response to our poll story and our report on the Rice Warner research findings commissioned by the Industry Super Network (click here) related to the belief that the findings are not entirely valid because the study was undertaken in isolation. Advisers said the research should also have taken into account of the fact that most clients need ongoing advice to maintain an investment and insurance portfolio that continues to reflect their needs.
Advisers also questioned the quality of the advice provided by industry funds, summed up by the comment:
Do the industry funds know the children’s names & occupations?
This same adviser also continues:
… do they attend the funerals of their clients like I do?
A number of advisers also questioned whether the cost of client advice provided by industry funds was subsidised by the member fees paid by all members, and whether this cost should be taken into account when determining the true cost of upfront financial advice.
Other advisers simply made the point that the more compliance requirements that need to be observed means an inevitably higher cost that must be passed on to the consumer.
This debate continues and our poll remains open. We want to know what you think…
Times are changing. If you can’t adapt perhaps its time you left the industry.
Happy to adapt, comfortable charging a fee for service as a professionial does & comfortable with Fudicial Duty as an AFA member & carry out anyway. My issue is a level playing field, rules are very in favour of industry funds with an internationial call centre acting in the best interests of the Industry Fund & not acting on behalf or in good faith for the client. We will see who makes the media for not acting in the best interests of the client in the future. My guess the industry funds & why, as they will only care about operating their business at the lowest cost possible without any care for the client.
Knuckle down and get busy guys. Time will show the outcomes. The big instos and the pollies are running this game and us individual advisers will wear whatever they “negotiate”. Dont argue with the approaching wave, just paddle.
I attended a breakfast this morning organised by the AFA where the Opposition spokesperson for Superannuation, Senator Mathias Cormann, presented and I don’t think it is too late to put the white flag up and surrender on the Opt in and risk insurance changes. We should all be opposing this Industry Fund agenda so that it doesn’t become law. Go and see your local federal MP and tell them how consumers are going to be adversely affected. Already one of the independent MPs has expressed concern about the Opt in provision!
Industry Funds don’t do a good job as evidenced by this true story. A young mother of 3 young children turned up at the One Path office to collect a cheque for the life insurance cover her late husband had on his life through his industry fund, One Path was the insurer. When his wife got the cheque and looked at the amount (about $100,000) she screwed it up threw it on the ground and said to the One Path staff member “how can I bring up my family on this lousy amount of money”! A classic case of the need for individual tailored advice not provided by the Industry Fund and only available by someone getting good financial advice from a professional adviser! How many more such cases like this exist in Industry Fund land!
Yes Realist, times are changing, for the worse, far worse. Just because we have had a few bad apples like Storm Financial not doing the right thing by everyone, let’s destroy the industry and penalise everyone. This shambles of an incompetent government in Canberra have an agenda and it will not benefit the consumer or businesses.
If you and others can’t see what is happening you need to take a good look at yourselves. The small boutique advisory firms will be wiped out in favour of the banks and big institutions.
I have no faith in the FOFA reforms as being generally a step forward at all and you only have to look at the track record of this government to see that it will be a failure.
At the end of it all, there will be fewer independent advisers and many consumers will not be able to afford financial advice.
Daryl I resent the fact that you beleive indusrty fund planners “don’t do a good job”. I have worked for Banks, major dealer groups and boutiques. And I can asure you that good and bad planners are everywhere! It has nothing to do with the organisation they work for. Seems to me that story sad as it may be has nothing to do with industry funds and more to do with the mother and her late husband not seeking advice in the first place. I am sure the result would have been similar regardless of what super fund the husband was with.
It’s easy to blame someone else for your problems scapegoating is easier than using drive and intiative to thrive in an ever changing global world. Those who blame the government, regardless of whether it is Liberal or ALP show a disntict lack of commitment and intiative. Change is the only constant and certaintity in this world. Government’s being captive of special interests have never made business easy, if you can’t change and thrive maybe its time you found something else to do.
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