Adviser Concerns on Increasing Cost of Advice

4
Which of the proposed FoFA amendments would have contributed most to allowing you to better serve your clients?
  • No single amendment - the main issue is the added cost of delivering advice (36%)
  • Removal of opt-in requirements (29%)
  • Removal of the final, catch-all (safe harbour) step in the best interests duty (11%)
  • Allowing 'grandfathering' of renewal commissions for advisers switching licensees (10%)
  • Removal of the requirement for retrospective Fee Disclosure Statements (9%)
  • None of the above (3%)
  • Allowing ‘general advice’ to be exempted from the definition of conflicted remuneration (2%)

Advisers appear to be more concerned with what they believe will be an increase to the cost of providing advice as a result of the disallowance of the FoFA amendments, than they are with any of the specific amendments that have been disallowed.

As we go to print, more than a third (36%) of riskinfo readers who have taken our latest poll have indicated the added cost of delivering advice is their biggest concern following the disallowance of the FoFA amendments (see: Senate Takes Axe to FoFA Amendments). Meanwhile, one in four advisers believes the removal of opt-in requirements would have contributed most towards allowing them to better serve their clients, followed by the allowance of grandfathering on renewal commissions (14%) and removal of the requirement for retrospective Fee Disclosure Statements (10%).

As we reported last week, the Government has since secured a deal with the Opposition to allow the passage of grandfathering on existing renewal commissions for advisers, along with a number of other proposed, but less controversial, FoFA amendments (see: Grandfathering Agreement Reached).

While virtually all areas of the industry see the agreement on grandfathering as a victory for common sense, the adviser community appears to maintain its strong support for those amendments that remain, at least for the time being, disallowed.

Further negotiations on the proposed FoFA amendments will take place in Canberra during the effective period of grace to 1 July 2015, extended by ASIC, to allow advisers and their practices to ensure they are compliant with the FoFA legislation as it currently stands.

In the meantime, however, do you agree that the key issue on this poll question relates to the perceived increased cost of delivering financial advice as a result of the disallowance of the FoFA amendments, or do you believe one of the specific amendments is the most pivotal element needed to be implemented in order to better serve your clients?  Tell us what you think…



RELATED ARTICLESMORE FROM AUTHOR

4 COMMENTS

  1. let’s face it compliance significantly increases the cost of providing advice. No client reads the SOA no matter how well set out, short or easy it is. Yet the cost to make sure it’s correct and well supported costs each client thousands of dollars.
    The current regieme was required in a world where disclosure of conflict was considered enough.
    We’ve moved past that. Advisers don’t want to be conflicted and if they are not then why maintain the shackles of the past.

    I would be happy to have no insurance commission, no ability to debit fees through super a degree qualification or post grade education requirement if it meant that I; like a doctor or a lawyer could offer and implement advice with nothing more than the application forms and a diary note.

  2. My biggest concern, is the constant need to separate Insurance advice from Investment advice.

    Most of the debacles and loss of life savings, has been around inconsistencies in the way Investments are sold and managed, yet retail Insurance advice is continually dragged into the arena as if Insurance advice has caused the same newspaper headlines, which unless I have been reading the wrong papers, they have not.

    Over 5 Billion dollars in claims was paid last year, though the way the Life Industry was criticised ( based on reviewing 200 files ) it almost appeared the Life Industry stole 5 Billion dollars.

    I am hoping that the Life Insurance area can be separated from the Investment area and treated accordingly, as no matter how hard you try, Insurance is not now and never will be the same, so let these 2 completely different Business models go their separate ways and let professional life writers get on with our jobs.

  3. Jeremy – what planet have you been on the last few years. The root of the problem FoFA is trying to address, in part anyway, comes from the fact financial planning has grown out of the life insurance industry. There may be some different skills required but to provide holistic advice to a client which properly addresses their objectives insurance is one important plank only.
    What really worries me is the commentary and number of half good planners out there (good but not great) who are starting to make noises about how much easier it is to make a living from writing risk business and loans – that says everything I think.

Comments are closed.