In the survey readers were asked whether they were feeling prepared to meet the opt-in requirements, which comprise a part of the FOFA reforms.
Of the 167 readers who responded, 116 (69.5 per cent) said they did not feel prepared to meet the requirements by 1 July.
This contrasts with the 51 advisers (30.5 per cent) of respondents who said they were feeling ready.
FPA general manager of policy and conduct Dante De Gori told ifa it did not “surprise” him that most advisers and licensees were unprepared.
“The advice I would give to members, and advisers in general, is to make every attempt to do the right thing to get there because that demonstrates your willingness to comply rather than just saying this is too hard. You have just got to show you are doing it,” Mr De Gori said.
Of the advisers who had prepared for opt-in, Scanlon Richardson Financial Group’s director and AFA director for Tasmania, Matthew Hawkins, told ifa his business made the “prudent” decision to implement opt-in requirements across its whole network.
“When the business was established, we wanted to ensure we offered our clients a clear, transparent, tangible fee structure with a clear correlation between service and fee,” he said.
“We also wanted to ensure continued accountability to our clients for their prescribed service agreement.
“By implementing the opt-in renewal notice for our entire client base we can ensure continued engagement from all our fee-paying clients, as it is our belief that the relationship between an adviser and client is a two-way obligation,” he said.
Pursue Wealth’s director, Sam Robinson, said her business had taken a number of approaches to getting prepared for the opt-in requirements.
“Our initial preparation for opt-in was based on educating our members around the new process,” Ms Robinson said.
“This includes explaining how important it is to have a meeting to review and sign the opt-in letter to continue our relationship.
“We [also] decided the opt-in engagement letter will become part of our standard process during every review meeting with our members – regardless if their ongoing package is for quarterly, six months or annual reviews,” she said.
Opt in is bi-annual, so if you do every year at review, it wont matter if next year they miss a review date, because your last opt in will only be 12 months old, leaving you with 12 months flexibility up your sleeve before you are ‘required’ to re-do it.
My 4 year old daughter could figure this out.
[quote name=”Gerry”]Does this put the client in a better position? Does it provide better protection from poor advice? Is it in their best interest that their adviser spends more time on regulatory disclosure and less time on their situation?[/quote]
Gerry – YES IT DOES. It protects them from paying fees and not getting any value in return.
With modern technology it should take maybe 1-2 weeks to set up for this change initially, and add perhaps 10 minutes per year to each client.
That’s been our experience, no issues.
How can anyone not be ready? This has been talked about for several YEARS now. We went to permanent FDS and annual opt-in for every client back at the start.
Add about 8 minutes to preparation for each review (we actually provide service they pay for, so we sit down with every client, every year and its just another 5 minutes on the discussion and a few extra signatures.
EASY PEASY!
We had always (since before all this) disclosed fees annually (flat dollar) and has them sign an annual engagement letter anyway.
I am bemused why this is so hard for so many…
If your clients are not engaged, turn their fee off, tell them they get nothing, at all, and when they want/need something, you will charge fee for service for that.
Pretty simple i thought…
Unless you still rely on commissions, have no set fee structure, more clients than you can service, dont do reviews, etc
[quote name=”Paul”]This article is about Opt-In, not FDS. They are completely different.
An FDS only has to be provided to a client by their anniversary date. What they then do about it is up to them.
Opt-In not only has to be provided, it has to be signed and returned by the client within 30 days of their anniversary date, or the adviser has to turn off their fee. No big deal if your client responds to everything you send, and is always available for your preferred meeting times. An absolute nightmare if your clients are busy people with better things to do with their lives than stuffing around with unnecessary bureaucratic paperwork.
Anniversary dates for FDS can be brought forward to simplify administration and timing. Anniversary dates for Opt-In can’t be changed. And because an FDS must be provided with Opt-In, the bring forward provisions of FDS are of no real use anymore.[/quote]
Gday mate
Opt in dates can be brought forward earlier to align with FDS and or review date if needed.
Clients do not need to sign the opt in notice, they are able to reply via email, post, fax or SMS. This has been confirmed and announced by our dealer group.
It is going to be a challenge but if clients value your service then they will take the 5 minutes to sign the form to continue to pay you.
My clients are busy people like everyone else.
However, they also know the importance of taking control of their financial future and that at certain times every 2 years due to legislative requirements to enable them to continue working with me they will have to sign a opt-in form.
Stop being lazy and sooking about what we can’t change and spend more time building your working relationship with your clients.
Your comments are more reflective of your business not necessarily everyone elses as both Dylan and I in these comments seem to have just accepted the change and moved on.
This article is about Opt-In, not FDS. They are completely different.
An FDS only has to be provided to a client by their anniversary date. What they then do about it is up to them.
Opt-In not only has to be provided, it has to be signed and returned by the client within 30 days of their anniversary date, or the adviser has to turn off their fee. No big deal if your client responds to everything you send, and is always available for your preferred meeting times. An absolute nightmare if your clients are busy people with better things to do with their lives than stuffing around with unnecessary bureaucratic paperwork.
Anniversary dates for FDS can be brought forward to simplify administration and timing. Anniversary dates for Opt-In can’t be changed. And because an FDS must be provided with Opt-In, the bring forward provisions of FDS are of no real use anymore.
I agree that it is another administrative task that increases cost and most clients don’t care about.
However, I took the view of turning this into opportunity.
I have being doing FDS for 2 years now to every client. i have found that it has strengthened the relationship I have with clients by demonstrating that we do what we said we would do and not being afraid to discuss things like fees regular basis.
I also found that I now have an excellent idea on how profitable each client is and allows a conversation with higher maintenance clients about fees and value.
We now receive a higher amount of clients referring others to us than we ever had in the past.
The absolute absurdity of the opt-in legislation is that people sitting in older retail style funds with built-in comms won’t receive a notification of what their adviser is receiving. But those clients with the fees specifically laid out on their statements, do get an additional notification. It just goes to show that the peanuts who drew up this legislation have no idea what they are doing when it comes to regulating our industry.
[quote name=”Paul”]Dylan, you must be that mythical adviser whose clients are either responsive and organised, or you can easily “pop in” to see them and get things signed.
My clients are busy professionals who ignore most of what I send them because they know most of it is bureaucratic red tape I have to comply with but is of no real benefit to them. Opt-In will fit into that category. They will take no notice whatsoever and be completely surprised when they eventually realise they are no longer my clients, I haven’t been monitoring the important stuff for them, and they have to incur the costs and inconvenience of re-engaging. When they ask who was responsible for such a ridiculous law, I will tell them it was the unions and their Labor puppets (aided and abetted by Lambie & Muir).[/quote]
My post meant to say “I am ready”. Yeah completely understand. Look i’m not happy about it either but thankfully we have not got a great deal of clients in the bucket you just referred to. That would and is going to be very difficult and I do feel advisers who will lose some clients this way. I agree with poster #4 in its intention, I just wish it could implemented better. I think I will probably lose one or two sadly aswell. It’s just a shame that there are so many good advisers that will suffer because of the actions of a few.
Good luck to all.
Dylan, you must be that mythical adviser whose clients are either responsive and organised, or you can easily “pop in” to see them and get things signed.
My clients are busy professionals who ignore most of what I send them because they know most of it is bureaucratic red tape I have to comply with but is of no real benefit to them. Opt-In will fit into that category. They will take no notice whatsoever and be completely surprised when they eventually realise they are no longer my clients, I haven’t been monitoring the important stuff for them, and they have to incur the costs and inconvenience of re-engaging. When they ask who was responsible for such a ridiculous law, I will tell them it was the unions and their Labor puppets (aided and abetted by Lambie & Muir).
Gerry,
This is one thing that I think is in best interest of the client.. I really don’t like the administrative burden but if you are actually providing an ongoing service to clients this shouldn’t be a huge burden.
Too many advisers have just tack on a 2-3% adviser service fee onto client’s super fund and don’t provide any service… This stops that.
Does this put the client in a better position? Does it provide better protection from poor advice? Is it in their best interest that their adviser spends more time on regulatory disclosure and less time on their situation?
Of course we are not ready. The Labor party agreed to scrap Opt-In for all advisers who became a member of an association. It was sold by Bill Shorten as a compromise which would see greater professionalism. The problem is ASIC. They have hijacked the financial planning profession by not working with the associations to approve their codes of conduct. The Government urgently needs to intervene in this matter. The Opt-In rules are totally unworkable. They work against the best interests of our clients and will see the cost of advice increase unless more flexibility is granted immediately.
We are ready. All our clients are in existing service agreement arrangements so just another form to get signed with their review meeting. I think the key here is to use alerts/widgets to keep track of them and get on top of them early. Ie, if you have a client who is poor in returning forms, go out to their office or drop by instead of posting. Otherwise, best to align review due date, fds date and opt in date all together. Good luck everyone. Lets keep doing our best.