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Whats funny about all of this is that the folks coming up with all of the BS, no I did not mean Bill Shorten,
are the same fools that gave this country a huge deficit and debt ( Labor and now Libs ), whose short sighted vision has been nothing but a disaster, Just ask any pensioner whose pensions are cut, aged care recipient who has to pay more, worker who for working harder pays more or even someone who saves via super or otherwise. Yes, these geniuses in Canberra tell us advisers how we must act in the best interest of our clients but they do not act in the best interest of the nation. While sipping champagne watching fireworks on New Years Eve or buying that property in Qld on the taxpayers purse...of course its official business. Is that conflicted remuneration? Are they acting in the best interest of their clients, the taxpayer of the country? I am sick of advisers being kicked at every turn with compliance costs higher than ever before while our businesses and clients pay a significant price for the incompetence that is in Canberra and every state government.. Shame as most advisers can teach these fools in Canberra and government ministers in general of any persuasion some simple rules, like don't spend what you have not got, watch that issue of debt so that you and your family will be okay. Plan for the future. Pity the adviser that dares to do there job in the interest of the client. Pity....
Your point about educational standards is well made, and bringing this back to the topic of the FPA... how is it that some of those advisers with woefully low educational standards are still allowed to call themselves a CFP?
The answer of course is that they were grandfathered in at a time when the FPA was a cowboy association. But the fact that the FPA still has done nothing to correct this, speaks volumes for the hypocrisy and conflict of interest that drives so many FPA decisions.
At least the guy who cheated on his CFP exam had completed a degree and passed the first 4 postgraduate level CFP units. There are plenty of people the FPA allows to use the CFP designation who have completed none of those things.
It's all true and the fact of FOFA is that investment orientated FP books are MASSIVELY overvalued at the moment. Valuations will fall to the same range as law firms and accounting practices (0.7x to 1x revenue). However, there are huge opportunities for those that can sell their time effectively. People do still want advice and I disagree with the idea that more people just want to do it themselves. What they want to do is read about it and hope the problem takes care of itself. More choice just creates choice paralysis and good service goes a long way. Service industries are exploding, those that can deliver clear value and simplify the complex will continue to do well into the future.
Compliance is an absolute nightmare this is also true. So the challenge is there for licensees - the law is removing the conflicts that drive poor outcomes - time to revisit your service offer and requirements for practices that are not so conflicted!
Yes the only winners with FoFA are compliance staff. A booming industry. An issue is that dealer groups haven't moved with FOFA. Advisers have changed and been forced to adapt with compliance, fund managers have changed even with cut backs to BDM etc but your average dealer group is still living in the eighties thinking all advisers need is a PD day and all will be right. The law with best interest forces additional legal obligations onto the the adviser but dealer groups have not changed from the 80's and just added more red tape on top of the existing red tap.
The industry as we currently know it will change, my doctorate is on "Fin-tech/innovation and the effect on financial services", and all i can say, from my research and being an adviser right now, is start to review your model for the change that is occurring now.
Real Estate is burying its head in the sand, but they are under threat from Purplebricks, and that model will have an effect on the multi thousand $$$ commissions for little work. Just one more example.
I feel commission in insurance will remain, they may call it something else, but the insurance companies need an agent out there for them, how else can it work?
20 years ago it was an exciting industry, yes i was brought up in insurance and got really excited about the big sale or complex buy/sell, but now I'm afraid we all have to look at other ways of making our business worthwhile, or end up doing twice as much work (and compliance) for half the money.
Josh, you seem to have taken a leaf out of 'Mein Kampf' or some notes from Stalin... Or am I wrong, and it is more like a mob trial and lynching? Who is the 'we' you discuss and who decides all the necessary rules and guidelines? I kinda thought ASIC, the Corp's Act, fiduciary obligations, etc and all the other best interests provisions are there for that and even the FPA disciplinary committee - are you suggesting somehow you have greater insight and powers than all the regulatory bodies combined? Really? Based on what perspective of FP exactly?
This 'article' does little but show your naivety.
Agreed John - ASIC is like a blind loco driver, feels he's heading down a hill so slams the brakes on and slows down the momentum just as he starts going up the next hill, so he then starts stoking the engine again to try to get the steam up...
A lot of what is wrong today is due to what ASIC did or didn't do previously. With real guidance and practical commercial application, rather than the witch hunt they are pursuing and fostering in the likes of young naive little Jacob here, we would have a more robust system.
Melinda, I am guessing you're regretting making this a story with the wasted time writing replies here etc.
Generally when you post in comments in other articles on IFA I agree with your opinion, but in this situation, it almost smacks of either naivety on your behalf or even a little bit of ambulance chasing (sorry I know that sounds harsh but it does come across somewhat like that). I am sure there is a whole level of other information you can't put on here, but on the surface, it sounds like a sketchy sob story by a person out to get something from the bank.
Even the fact that this IFA epublication changed not only the title of this story, but from recollection also parts of the body text (I may be mistaken, but think not), is somewhat dodgy in nature.
Call me a cynic!
Excellent article Aleks, and so true.
So the FPA sees its role as the consumer watch dog and industry educator, OK, lets run with that. Lets talk education, lets look at managed funds, what influence does an adviser have over a managed fund? Short of reading and understanding a PDF file it is clear they have nothing. Remember the AAA rating system and how that was to help advisers select the right funds except the company doing the rating was paid to give it a good rating even though the fund was poor. Now lets talk ASX stocks, most (if not all) industry platforms limit ASX stocks to 300 top, ask any good trader and they tell you if that's all you got then you better have a lot of time on your hands if you are wanting to make money. Marcus Paddley in his book refers to this situation as the reason why so many consumers get bad advice. Lets face it, the FPA has always been a con, the FSC is a con, Fund managers are a con, the ISN is a con and the adviser is the channel designed to take the hit as part of the con- you will never read about a fund manager or bank exe ever being blamed for misleading the adviser with all their internal PR and must use promotions, that's the reason for no royal commission into banking, the truth would destroy the industry and its mirrors of lies.
at last someone with a commonsense approach
Really, cmon don't shot FPA for naming shaming poor advisers! RealWorld reminds me of a notice I once read on a door saying 'before you enter this office to complain , when did you last volunteer' !!!!!!!!!
"the product recommendation bias implicit in vertically-integrated businesses"
"...A cynical reading of the whole scenario would be tempted to conclude that this conspicuous silence might have something to do with the lucrative education and event sponsorship deals it has in place with institutions, or the vast number of institutionally-aligned advisers within its ranks."
Congratulations to the author. Two sentances that succinctly and accurately sum up the root cause of the majority of problems of the advice industry (can't call it a profession just yet). FDS, Opt-In, SoA's, FSG's, PDS's and endless litany of small text are not, nor ever have been, the answer.
The only thing missing is the woefully low educational standards that have applied to enable an individual to label their self as 'financial advisers'. Thankfully, this legislation actually makes sense and adds protection, credibility and value.
Very good article in relation to the compliance regime (more so than the commission statements) and backs up my statement to a university lecturer last week that I personally would not be recommending this profession as a long term option to an 18 year old looking to complete a university degree. This is very disappointing when you consider the obvious need for quality advice in this country. The worst part is that the people drafting and implementing the rules realistically have no idea how the advice process works so the continued inability of the compliance system to protect those at risk of poor advice whilst being costly to follow will continue.
I haven't been quite so drastic, I will move back from the coal face of advice. after 33 years I am at the point where I really cannot be bothered to "Up-skill" at my age, and as such will be restructuring and looking at my succession plans more closely. I agree strongly with the assertion that the advice regulatory world has gone mad, and I suspect the headlong rush by our politicians and regulator will be another case of throwing the baby out with the bathwater. I can see at some point in the future (like the UK experiment) a winding back of much of the changes. but it will take time.
as for commissions, I am unsure about that, I suspect Life companies will want to retain them, otherwise where does the "impact" on clients through so called "Churning" appear, if there isn't any commission?
Great article, and I agree. Legislation and compliance is over the top, and not actually protecting consumers. A full review of the system from the ground up is required. Consumer protection is absolutely required, but what we have in place is not doing that.
Well said. Compliance is a blind monster that serves no-one. The big dealer groups think it will protect them (it won't as the Courts don't care about your templated disclaimers), advisers have to wade through it like it's quicksand and the clients wonder why they have to sign so much confusing paperwork. Scott Pape actually criticised advisers for their lengthy SOAs, as if the adviser wants to hand these wads of paper out. Compliance is working against the aim of full disclosure. It only clouds the important information, but I get the feeling some would prefer it that way.
Yes, all true. But where is the resistance to higher education coming from? i.e. what subset of the adviser population is resisting getting a higher qualification. and why?
See you on the other side mate! I can't wait to read the book.
Clearly you never worked at CBA!