In an email to members on Saturday, AIOFP chief executive Peter Johnston said the association had initially campaigned against the FPA’s proposal in its adviser awareness program to politicians, based on a “10 member sample” of opinions from its 150 member AFSLs.
An email sent to MPs last week as part of the awareness campaign warned of the dangers of self-registration from a product perspective in particular, with Mr Johnston suggesting the removal of licensees as the ‘middle man’ could leave advisers exposed to unscrupulous manufacturers.
“We favour the AFSL option due to its greater protection for consumers savings around APL control and research capability. Dealer groups have the resources to employ in-house research analysts to create their own APL that protects advisers and consumers from product failure,” he said.
“We don’t like the idea of circa 15,000 advisers being exposed to numerous product manufacturers trying all sorts of strategies to get inflows – this ‘open architecture’ approach, giving advisers full access to select any product they wanted, was the 1980s/90s environment before dealer groups controlled the process and demanded APL discipline.”
However, Mr Johnston conceded some members had expressed strong support for the FPA’s proposal, including one “advice veteran” who said self licensing would be a “simpler structure” to align the interests of advisers and consumers.
The proposal to move to individual registration has garnered broad industry support, with a recent ifa poll of almost 650 readers revealing that 61 per cent were in favour of the move.
Mr Johnston said the issue would be debated further at the AIOFP’s national conference later this year, which would feature a selection of members arguing for and against the idea of adviser self-registration.
To FPA,
I support the idea of individual registration but not with the string of having dealer groups to control the products. I want individual registration plus simplified process monitored by one single government or appointed organisation to oversee the compliance issues. Advisers can be graded like using driving licence penalty points system to determine how deep and how frequent they are being supervised. The same organisation will negotiate on our behalf for PI. Advisers regardless how large the group they belong to can operate on the same level field, just like doctors, lawyers and accountants. Dealer groups can play the role of office and technical support and training and even recruiting. The government organisation cannot just sit there and charge us Fees without any contribution!
I very much look forward to individual licensing and using service providers. In my case I would gladly have my current licensee as the service provider but that is not mandatory.
This model of partnerships and service providers works well in law and accounting and doctor.
I see no plausable reason to remove the current AFSL system. You will end up with more rogues and less checking.
MORE rogues?
The current system has lead to half a dozen governmental enquiries, a Royal Commission and billions in remediation costs.
Why would we want to continue a system that’s clearly failed? I really don’t see how the last ten years can justify the continuation of the AFSL system.
It’s an unmitigated failure from top to bottom that’s held back the advice industry while creaming billions of dollars out of clients and advisers pockets.
When the status quo is as broken as the AFSL system, why would anybody want to keep it?
The existence of a ‘good’ licensee doesn’t make the model a good one – it makes them an anomaly.
AIOFP what a joke body are they seriously this condescending thinking that we are idiots and can’t tell a good financial product from a bad one and we need some AFSL telling us what is good and what is bad this really annoys me.
I don’t need some third party telling me what are the best financial products out there in the market I can research it myself and don’t know if they were aware but we need to we can’t just say well it’s on the AFSL APL so that means it’s the best product, there was a court case about this were the judge found advisers need to do further research into products they can’t just rely on APL.
WE DONT NEED AFSLS AND WE DONT NEED FINANCIAL PLANNING BODIES THAT SUPPORT THEM GET RID OF THEM
I can use Morningstar, Lonsec or any other research house to help filter investment choices for me that I will then make a prudent choice of based on my clients need
How naive is this idiot at the AIOFP how many times has the AFSL provided us with dodgy financial products on their APL like AMP, IOOF and the big banks
Exactly as someone pointed out why doesn’t ASIC start going after dodgy product manufacturers.
AGREE !!
Lets keep having more change this will work wonders for an already beseiged industry
beseiged industry..? i thought it was a profession. (??)
A profession can be involved in an industry. A Dr is a professional and is part of the medical industry
advisers can have doctrates
So we shouldn’t fix what’s clearly broken because there’s been too much change already?
We shouldn’t sweep up the broken plate because it’s already been dropped?
The issue is negotiating PI insurance, more than anything else.
Mate if Lawyers, Doctors and Accountants can figure out a way to get affordable PI insurance I’m pretty sure we can too
funny that
They all ether rather than throwing each other under the bus…
vested interest doesn’t want us to. we have to DEFEAT them.
Great comment! I’m so encouraged to see comments like this – it leaves me feeling a lot less lonely in fighting these vested interests.
Advisers will not get PI the cost of advice will escalate and claims will go through the roof with no major licensing oversight . The major licensees are made up of the best compliance teams providing education and restricting advisers erring , no oversight , you get mayhem, just look at the united states states with the policing
The exact opposite will happen everyone thinks PI insurance is so impossible to get but I have my own AFSL it was not expensive, yea the dodgy financial planners will have claims but the vast majority of us who do the right thing it will be like business as usual except that we won’t have to pay huge fees to AFSL who do nothing for us we can do CPD with other providers we don’t need AFSL for that, so the cost of advice will go down as we don’t need AFSL leaching of us anymore
The ‘best’ compliance teams?
You mean the ones that misinterpret legislation to justify their own roles and salaries? The ones participating in an unnecessary level of expensive duplication across all of the different licensees?
Remove the ‘best’ teams, have one set of rules for all that we can all follow with consistency and clarity via a centralised disciplinary body.
Doctors don’t have different interpretations of the rules, why should we?
Hmmmm. I smell a rat. Who really stands to gain. I think only the FPA>
How?
And will this phantom benefit really exceed the fat salaries being creamed out of licensees? Funded, I’ll remind you, off the backs of advisers and from the pockets of their clients.
Will it be more than the sum total of ‘ticket clipping’ the licensees are engaging in each and every day?
Advisers carry the risk now – why should we also fund the owner of the boot on our neck?
Why now ? Oh the FPA just lost NAB and Westpac etc etc as members. The biggest threat facing the advice industry is the FPA. If we want to reduce over regulation then we need clear representation and we can’t have institutions dictating advice in Australia. $60,000 cash payment with members names paid in bulk certainly can, according to the FPA shape the direction of Advice in Australia and we don’t need that. It’s pretty clear the FPA puts themselves first and this is yet another move by the FPA to be a quasi regulator. Just don’t trust them.
it’s not just the FPA, all associations do that, just ask any member of CPAA or CA ANZ they always complain about their membership body who have the same issue, CPAA I don’t need to tell you any more than Alex Malley, CA ANZ lapdog of the big 4 accounting firms
CPAA or CA ANZ don’t get payments from Reckon or Xero. Neither do any of those big four firms pay for their staff membership fees in bulk. There is currently not an Accounting body that gives out discounts based on your employer. Neither does the AMA get payments from Pfizer and you don’t pay a different fee because you’re a Nurse working for Ramsey Health Care. There is significantly less regulation in those two industries because of better representation, unlike the FPA where Treasury appreciates they are the voice of firms all appearing before a Royal Commission.
Excellent comment.
Actually – having worked at a big 4 accounting firm – they pay for both the education and membership fees for CAANZ. And the accounting bodies take plenty of sponsorship money from Xero! and Quickbooks! and Practices! and Companies!
so what AIOFP thinks right is to keep paying close to hundred thousand dollars of hard earned money every year to these licensees to protect us from “unscrupulous manufacturers” & keep saying that the advice fee is unaffordable to common Australians. how about a better regulation on fixing these “unscrupulous manufacturers”
Hi Vin
Have you seen the AIOFP document that details the litany of dodgy products?
Guess which insto gets lots of mentions?
AIOFP actually championed for many years having ASIC review the products as to the likelihood of achieving stated objectives rather than simply checking the prospectus included all of the required dot points. ASIC’s response has been that is not our role.
Its pretty obvious the average consumer cant do it for themselves so it gets pushed back on to the adviser, or whoever they outsource to. A dealer group is one outsourcing option. Or just avoid the products like ag etc.
Next we may find ourselves back with unlisted property syndication or the like as the next big thing. Anywhere you can hide overpriced payments to spruikers. ASIC will then say that is real estate and outside our mandate.
Self licensed and mainly dealing in direct equities is a good spot to be except for GFC, COVID19 crashes etc. However those losses are ones a client can relate to and understand. Explaining Why half their money is gone a day after listing is something else.
I have to thank the AIOFP for proposing what’s perhaps the most ludicrous argument for retaining AFSLs as they currently are.
It must be nice for their members to know their association has so little faith in their abilities.
The obligations of the self registered adviser will vary little from the obligations of a small AFSL. It is not a complicated process to move to self licensing now as an AFSL if you have the capacity to do so.
Those will do have the capacity to have their own AFSL should be already thinking about it. There are plenty of people who have done it who are happy to share their experiences. However there is a lot more to it than ASIC simply knowing who you are and dealing with a direct registration. Once you start considering the many minimum requirements you quickly develop a better understanding of what dealer groups are paying out and why they are taking the cut they are.
No one has definitively detailed what might be required for a self registered adviser as proposed by the FPA but a minimum would include:-
– AFCA membership
– PI Insurance
– Compliance committee
– Investment Committee
– Independent audit – financial, and possibly compliance
– CPD monitoring
– TPB registration
– Ongoing FSG etc maintenance
Just the basic things a small 1-2 person AFSL does now.
Costs
Upfront say $10k
Ongoing
PI Min $20k
Compliance monitoring $6k
Financial audit $5k
Software $10k
CPD $5k
Professional Accred $3k
If you have the capacity, don’t wait, become an AFSL yourself now. Just do some research before you start spending any money.
the system is too complicated. it was designed by and for the big bank’s compliance teams. it’s too onerous for a small-time fin adviser to cope with running an AFSL, (even the big banks couldn’t cope and have left) along with all the other obligations. don’t do it you will go broke.
the system needs a fix first.
how do barristers and solicitors and accountants practice giving incredibly risky advice and their PI is cheaper?
a financial planner’s PI looks like an Obstetricians because the liability is forever the advisers.
very few advisers actually think about liability. it’s huge, the best thing we can do collectively for the entire industry is to abandon it.
I’m already fasea qualified degree holder and passed the exam, but I am saying farewell.
the only way we can have meaningful reform in the industry is if all financial advisers – who are in the position to do so – abandon it. otherwise, the government is not in a hurry to fix anything.
lots of abondment taking place
AIOFP still hasn’t paid back the left-over funds from the aborted class action. Whose voice are they?
We banked our refund on 6 March 2020 from the ARC Challenge. Did you actually support the action or are you just making this information up? For the record a detailed summary of costs incurred was circulated and 55% of funds returned.
I received my refund.
Good to know. I will check again. My apologies if I was wrong.
I received my refund as well. I’m assuming 1) You didn’t contribute and 2) You’re a member of the useless FPA or AFA.
can everyone please stop bagging the fpa, I am a member, I also have an m.fin plan and passed the fasea exam.
the fpa is not worse, the accounting bodies are just as bad. it’s not about representing members anymore it’s about building a profile for the next step.
all associations in Australia are useless, some of course worse than others. the accounting bodies are much much worse they just appear to be “professional”
don’t trust me, just ask any accountant what they think of their membership body, most hate it and wish they didn’t have to belong but they have to be a member for various statutory registration purposes etc