Industry sectors should curb their self interest in order to better serve the financial needs of consumers, says Connect Financial Service Broker’s Paul Tynan.
In a release that also offers an alternative definition of ‘advice’, Mr Tynan is calling on interest groups in the industry to embrace solutions that offer balanced outcomes in order to achieve their ultimately shared goal of supporting the financial, investment, retirement and protection needs of Australians.
Mr Tynan told riskinfo he supports the aims of the Future of Financial Advice (FoFA) reforms because they promote transparency and the interests of the consumer. He said that any criticism of the final structure of the FoFA reforms should not be directed at the Government, but rather towards self interest groups who have lobbied, sometimes to the detriment of the consumer, to ensure their own agendas have been met.
… the industry should consider re-defining the term ‘advice’
In calling for a balanced approach designed to achieve outcomes that will cater to the interests of all stakeholders, Mr Tynan says the industry should consider re-defining the term ‘advice’ by categorising it as either ‘aligned’ or ‘non-aligned’.
He says the key distinction that separates these two definitions of advice relates to ownership of the client and whether the adviser is able to retain his/her client book if they move to another licensee.
The adviser is in a salaried (or self-employed) position and licensed via a bank, industry fund etc. There is a restriction of ownership of client and buyer of last resort (BOLR) terms apply.
Non-aligned advice is where the adviser is a self-employed business owner and there is no restriction with respect to client ownership. If the adviser wishes to leave a licensee the clients are clearly transferable.
Mr Tynan suggested the terms ‘aligned’ and ‘non-aligned’ should be used, given the legal complications associated with the term ‘independent’, and said this clear distinction between the two types of advice would offer transparency and greatly assist the end-user to appreciate the nature and scope of the financial advice being provided.
Mr Tynan concluded by saying that “…it’s time to take a balanced approach that ensures the needs of clients are paramount and are met.”