Licensees Need to do More on Poor Advice, Churning Issues

0
Do you believe your licensee takes appropriate action in dealing with serial churners?
  • No (54%)
  • Yes (25%)
  • Not sure (20%)

Our latest poll results suggest advisers believe their licensee has been under-performing when it comes to dealing with serial churners.

As we go to print, just over half of our poll respondents (52%) have voted ‘no’ to our question about whether they believe their licensee takes appropriate action in dealing with serial churners. Only 28% of advisers believe their licensee takes appropriate action, while the rest, a reasonably significant proportion of 20%, are unsure.

This poll was motivated by ASIC Deputy Chair Peter Kell’s comments at the recent AFA National Adviser Conference (see: Business Structures Allowed Poor Advice to Continue). And while the verdict so far delivers a reasonably strong message from adviser to licensee, the comments we received have been quite balanced, looking rather at the process and the system as the culprits of a failure to address churning and other poor advice, rather than sheeting responsibility at the door of the licensee:

Where many good ideas fall down is when the solution becomes part of the problem…

“Where many good ideas fall down, is when the solution becomes part of the problem, in that the process is complicated, takes valuable time to administer and unless the criteria is set up correctly, it will ultimately grind into a bureaucratic mess that does not achieve what it set out to do.”

“…finding bad apples and systematic inadequacies is only going to be reduced, when a proactive strategy is implemented that tracks current processes…”

“…Mr Kell is once again trying to avoid any responsibility for ASIC’s role in monitoring and supervision by continuing to bash advisers and now licensees in an obvious attempt to deflect attention from ASIC’s mismanagement.”

This adviser believes the answer to poor advice lies elsewhere:

“All the while [ASIC] have ignored the sensible solution of increasing education requirements for new entrants and actively policing the products available to retail investors…FSR was introduced almost 12 years ago and the one who has systemic issues is the regulator…”

So, who should take responsibility for churning and poor advice – the adviser, the licensee, the product manufacturer, the regulator, or the more intangible ‘system’? Or is it a combination of all these stakeholders and historical factors?

The advice world is undergoing a period of significant change, and in some respects, the life insurance advice world, in particular. Are you one of the 50+% of advisers who believes your dealer group has been dragging its heels in responding appropriately to churning and poor advice, to the extent that you see them as part of the problem? Tell us what you think as our poll remains open for another week…