Two of the financial advice industry’s biggest critics have indicated they would review their communications to consumers if the Future of Financial Advice (FoFA) reforms are passed.
Speaking at a panel session at the ASIC Summer School, Choice’s Jenny Mack, and Industry Super Network CEO, David Whitely, expressed their views on FoFA, each praising the proposed reform package in the belief that it would improve the quality and quantity of advice delivered to consumers.
The panellists were asked by riskinfo whether, once the reforms were passed, their organisations would review their public messages, which have historically positioned financial advisers in a negative light.
(The reforms) really now probably do deserve the full support of the industry as a whole
Mr Whitely responded cautiously, indicating that further ‘watering-down’ of the reforms may mean FoFA does not deliver its intended outcomes.
“On the one hand,” said Mr Whitely, “those of us that have been critical of the system and the way it currently works can be expected to… change our views and become supporters of the industry if the reforms go through. The other side of that is that if they continue to get diluted to the point where we don’t believe that these reforms are going to be adequate to address the problems, then I think that puts us, and the industry as a whole, in a slightly more interesting position.
“That’s why we’ve been quite keen to say these reforms, in the current state they’re in, are moderate, and really now probably do deserve the full support of the industry as a whole.”
Ms Mack acknowledged that Choice had previously highlighted to consumers the problems with the advice industry.
“Some of the information Choice has provided to consumers historically has been about some of the problems in the industry, and that’s been a little bit unsettling for consumers. We’re hoping, once these reforms are in, we can provide some much more positive messages to consumers about how they can navigate their way through this industry.”
She added that while initial communication to consumers when the reforms were passed was important, it was critical that these messages were “…continued at periods over the following years, so that consumers really get to understand the – hopefully – changed nature of the industry.”
Its not about government employees to decide if FoFA hits the mark the end user will decide that for themselves.
I agree changes have been needed for over 20 years but taking a steam roller to crack a nut wont do the trick.
I suggest those that advocate these changes go to work in an advisory capacity, the gaps and problems would soon be glaringly obvious!
The industry fund campaign, which blatently blames advice fees for significantly poorer outcomes at retirement, is a diabolical one-sided misrepresentation. It is clearly possible for any super fund to outperform (after all fees) any other alternative (after all fees), particularly if advice included in the former leads to better investment outcomes. I bet Bernie and the other “models” in the adds do not work for free nor is the media free, and this is an additional cost to industry funds. Who pays for this, well the “members” of course.
Well said Marj. The biggest worry is that this industry has had a checkered past that continues to haunt it but the changes needed aren’t necessarily tose being suggested and being decided by people who have only the vaguest idea of reality in this sector. If changes are to be decided it should be by qualified experts who have some real life experience in advice, and not self interested parties. I can’t think of other professional occupations like solicitors, doctors, accountants etc who have been dragged through the wringer and had changes like these touted about like this media circus. I’ve seen wide spread bad accounting advice, legal advice and we’ve all heard of Dr Patel, but what major legislative changes have occured? What “Choice’ reviews have been conducted? Why are their Professional Bodies allowed to decide & govern while ours are mostly disregarded by the Gov as being relevant?
The most frustrating thing about FOFA is that, while the objective has been to improve the image of the financial adviser, the entire focus to date has been on the negative aspects of the profession. Ironically, given that laws only ever control the law abiding, they may not achieve much in the way of consumer protection. That said, if they serve to , ultimately, paint the profession in a better light, it will have been worth the pain.
The ACA – Jen Mack and the ISF may as well get married together, They both talk with the same tune. We have allways seen the ACA take very unusual steps to force the adviser out of any space with their clients in favour of large players like the ISF Movement
Not likely – the idealogical bent of these fabian socialists is not likely to change –
What would be great is the same standard of disclosure was consistent across the board.
this is really a commercial battle to control the growing superannuation honey pot.
this is not – and never was about whats in the best interest of the client – its about the control of the superannuation pool that is growing exponetially in Australia – its the “they know best brigade – lefties and fabian socialists – against the conservative let the market rule
Something from years ago at Sunday school
“first remove the log from your own eye – before trying to remove the splinter from others”
Could it be that FOFA will do planners a favour.Currently a lot of my time is taken up servicing clients I have had for a long time and earn very little from but I feel great loyalty to. I am not willing to charge them a fee for service because they can’t afford it.FOFA will force me to cut them adrift(unfortunately).The extra time I will have can be spent on my high networth clients and increasing my income.Is this is what is known as an unintended consequence?Thankyou FOFA.
I fully agree with Patrick. Hopefully the new conservative government will moderate all of this socialist agenda and their claptrap along with the Whitely’s of Australia to where they belong- North Korea.
I can’t wait to phone the current PM when she is booted out of parliment and congratulate her for stuffing Australia, problem is we will need 20 years to fix their mess.
Is this the same Ms Mack who oversighted the Choice program with Lachlan Harris that paid commission to Choice with each successful mortgage switch and which Choice attempted to deny was commission, and un-disclosed commission at that,illustrating ” pure conflicted advice “. And yes, that scheme apparently met its fate this week, but there was no mia culpa from Ms Mack et al
As to Mr Whitely, his has always been a political agenda first, and a ” fairness and equity ” agenda second. If the government proceeds with some of the super fund reforms from Cooper, there will be numerous amalgamations of ISDN funds, and further restraints on some of their investment and reporting activities
Judging by what my worker clients tell me, thier first reaction to an ISDN diatribe is along the lines of ” well they would say that, wouldn’t they “. ( Google Mandy Rice-Davies )
Surprise, surprise!! What an honourable combination….Whiteley and Mack. Just more of their comments to be added to my pile of “treating with absolute disdain!!”
I’m all for clear and transparent fees. Why does FOFA and other legislation not advocate that? You thought it did? Not if you’re and industry fund. I’m sure the $1.50 per week member charge covers the $300M media campaign which “is run to benefits members”. What a load of BS.
I went up against an industry fund on risk. They get wholesale rates being group super. They were more expensive and had poorer quality conditions than full commission on a RETAIL risk offering. They are trousering huge commissions themselves and then criticise the advice industry being conflicted and not transparent. PLEAAASSE. By all means bring in FOFA, but level the playing field, all funds must have a two year sign in otherwise it goes to the Future Fund to manage?? What’s their answer, shock and horror I’m sure. They must be made to disclose all fees and commissions received (and charged) as they are the only group to report “after investment costs” in the country. Real costs are around 1%, plus members fees, plus risk commissions. Could this be found in their PDS, ABSOLUTELY NOT. Directors fees and conflicts of interest need to be disclosed (eg the current minister, Shorten, was employed by industry funds for 6 years – go figure) as well as the costs of the 4 year or more media whitewash campaign on “compare the pair”. Something so hypocritical it would be funny…if it wasn’t so serious. Ms Mack, who generally runs a reasonable organisation, or so I thought, just adds to the hypocrisy.
By all means help us take out the garbage of bad and conflicted advice, but do it fairly, reasonably and on a level playing field.
Kevin 07 is in a no lose position meaning he has just sealed this government’s fate so in no time at all this will no longer matter…you little ripper…bring on the monk!
You would have to be nuts to believ this. Witeley and Mack believe the only advice consumers need can all be given by Union super funds.
They will never accept it even if clients do authorise their adviser every two years, and even if clients do agree to pay their adviser out of the assets in their investments, and even if clients agree to an asset based up front advice fee and even if clients agree to an ongoing asset based service fee and even if advisers do comply with every letter of the finally passed FOFA regulations.
It does not make sense. If a member was to be thouisands of dollars better off in retirement without an adviser, why would that still not be the case just because of FOFA.
Just look at the Gillard Rudd fiasco. it is their way or the highway.
Bad regulation must be resisted and if that means those who do not like it will spend members money on a negative campaign of criticism then we shall just have to live with that.
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