The corporate regulator began the consultation in November last year and received 466 submissions with an aim to understand the issues impacting the supply of “good quality affordable advice” and to implement steps ASIC and the sector can take to improve consumer access, which included roundtable discussions with advisers and licensees this past April.
Respondents identified overheads and fixed costs, SOA preparation, and rising regulatory and governance costs as contributing factors to the cost of advice, while the biggest obstacles in providing limited advice were identified as:
- Too costly to provide
- Regulatory requirements for comprehensive and limited advice are the same
- Concerns about meeting the FASEA Code of Ethics
- Some advisers unclear about regulatory requirements for limited advice
- Advisers restricted from providing limited advice by licensee or other party
Meanwhile, of 215 respondents, 148 said they don’t provide digital advice and have no intention to due to lack of demand, consumer preference for human adviser and compliance concerns.
Based on those roundtable discussions, ASIC said on Friday it has “identified a number of initiatives that may assist industry participants in providing good-quality, affordable personal advice to consumers” and intends to move forward with those initiatives.
ASIC has also committed to providing the industry’s feedback to government and to continue working with those in the sector.
I’ve knocked back so many younger clients just starting out in life who ordinarily I would go out of my way to help, either on a reduced fee or pro-bono basis. But it’s now simply too expensive and too complicated to help this segment (our future). Hopefully technology will bridge the gap soon, but in the meantime, it’s a dangerous world out there and I wish them well. The sad thing is that it just didn’t have to be this way.
Not to mention want to drag you off to AFCA for the fun of it. We need to develop a problem complaining client list that advisers can look up (like the real estate agents have done) & black ban them.
Just as consumers have every right to make a complaint, the reputation of a good financial advisor deserves to be protected against spurious allegations of lawyers and their troublesome clients looking to game the system. Lodging an AFCA complaint should come at a significant cost to consumers, as well as advisors.
too **** late….
It is important to not just complain about absurd actions from ASIC and APRA. Josh Frydenberg and Jane Hume are allowing this. The federal Liberal government are meant to control government departments. Don’t think for one moment that the Liberal government are not fully endorsing this attack on our industry. That is a fact; the only unknown is why. I suspect when advice fees have increased significantly, and adviser numbers are a fraction of what they were before, then the banks can make a push for robo-advice.
Really, all it would take for them to know why advice is now not affordable would be to have a very basic understanding of the regulations of the sector they are charged with regulating, and then use that very basic understanding of the industry and apply primary school mathematics.
It’s absolutely laughable that they were originally going to go straight to a consultancy firm to complete this affordable advice project.
If we are serious about fighting this, we as an industry need to get the numbers together and gather in the one place and seriously protest. Nothing else is working. If we do not then changes will continue for the worse and nothing will change……..
At the core, the industry is being directed by individuals who have likely never delivered advice to a client, ongoing or otherwise and have a scant understanding of the process and relationship with a client and the challenges it brings, please stop being the white knight, believe it or not clients are quite capable of making their own decisions and absorbing their own risk taking – they are wiser than they given credit for.
Tyler Durden below has nailed this…Soon they’ll be 5000 advisers left with on average 40 clients each paying $8,000. I’m thinking in the interim, average fee $6000 with about 50 clients..that will leave room for Ad hoc once off advice starting from $5,000. Personally however I enjoy helping ordinary Australians so will exit myself. At those numbers we’re talking about only 250,000 Australians getting advice or about 1.4% of the population over age 30. The other going to Tik Tok, unlicensed Property/BitCoin scams etc and the AwareSuper call centre…oh and of course ASIC’s prefered model of getting a lifetime of Advice at the end of the 15 minute tax return meeting with the Trusted Accountant from H&R Block. At those numbers ASIC should be wound up as it’s a waste of tax payers money. We’re now at the stage ASIC are doing themselves out of a job and as a tax payer we should be questioning if it’s the best use of Taxpayers funds.
It is all the fault of the AFA and FPA for not managing ASIC properly which is what we pay them to do…
Totally agree that AFA and FPA (especially FPA) have been useless. Talk about fees for no service. It’s just a great pity that so many financial planners are still members of the FPA; those planners are part of the problem.
well said…why would you want to be a member of the FPA that represents the entire finance sector and places the interest of Australians and Advisers somewhere in that mix…often not equally.
Agree totally. Unfortunately those with plenty to say under the banner of the AFA and FPA are not and never have been advisers. They have no idea what happens in the real world – and no awareness of the leadership that’s necessary if they truly are going to represent advisers. They are a waste of space.
There is also the elephant in the room that the only alternative for insurance and investment ‘advice’ will be Industry Funds. Clearly Labor wants this but do the Liberals really want these funds to funnel even more money to the unions?
At the same time ASIC release these so called Affordable Advice consultations, ASIC send letters to Super Fund Trustees to be super aggressive on checking Adviser fees, Advisers SoA’s, Adviser processes, etc.
[b]ASIC are forcing Admin Platforms to be a complete 2nd LAYER AFSL compliance burden and cost. [/b]
ASIC continue to say they want to help and make advice more affordable.
YET EVERY ACTION ASIC DOES IS THE COMPLETE OPPOSITE.
[b]ASIC = LIARS AND HYPOCRITES. [/b]
I wouldn’t usually contemplate defending ASIC, but I believe they said where Trustees suspected misconduct or other suspicions, not as a blanket / standard requirement.
You believe incorrectly. ASIC & APRA want a copmpliance system established from super funds to periodically and systematically review SOA’s etc – “While member written consent shows that fees have been properly consented to, reviews of SOAs and other documents for a sample of members provide a further assurance that the expected services have been provided in respect of those fees.”
Be prepared to have a new Master. The super funds will assess your job and whether you should be paid.
We should have seen this ‘unaffordable Advice’ train coming some years ago (I did) when there was a singular push towards ‘Professionalism’ without consideration of what that it broadly means. It means we are all aiming to become like medical Specialists, leaving nobody lesser-qualified to deal with a broken arm, unless the patient wants to pay huge costs, or ask Dr Google. We’ve needed a 2-tier system all along – Strategic Advisers and (limited) Product Advisers.
A discussion about shutting the gate after the horse has bolted
you should talk. ..
The reality is that this could so EASILY be fixed. So very easily and with little or no downside for the end consumer. Unbelievable. Have a read of the regulations around opt-in. Seriously ?!
Asic now require, eyeball scan verification, a blood pact, and the advisers name tatooed on the clients forehead as well as an hourly fee disclosure document hand delivered to the clients house to ensure that they know what they are paying for.
All this regulation has done is made my fees more expensive, hasn’t hurt my profit one bit, in fact I’m more profitable. Unfortunately I can not give advice to the people who really need it now, (this being the whole reason I began in this industry) financial planning is done, we are now in the eara of wealth managment only.
Are you reading this ASIC or are you still out having lunch? it is almost home time for you beige cardigan wearing public servants!
This is what is now happening to clients so thanks for increasing our profits also just like Tyler.
ASIC have defined customer service as providing a RoA. So switching from BHP to RIO is their definition of customer service and everything else like actual real Financial Advice, dealing liaising with Centrelink, cashflow, how long one’s capital might last in retirement etc etc is worth ZIP…As we’ve reached that point of Government Regulation and intervention I don’t have any faith in them whatsoever.
Your right – and this I feel was a mistake by the ASIC.
If you charge a client a fee for these services (all the zip ones) from the clients Bank Account (a cash hub so to speak) but NOT from product (too hard), then all you are providing is service – very simple.
Thanks ASIC?
I love an ASIC press release. We have consulted with advisers but have changed nothing but promise to do something in the future, we’re just not sure what it will be and it probably won’t reflect what we were told. I also like the blaming of the licensee’s rather than themselves because of course ASIC are here to help financial planners (to be clear that was sarcastic).
Sure but where are our reps association like mortgage brokers have, to shout dowm ASIC?
SMSFs are going to boom due to these Govt rocket scientists
To use a term coined and used by John McEnroe “You Can’t be serious”.
This article comes out the same day that Danielle Press & Helen Rowell announce that in addition to Clients providing signed consent forms authorising the payment of ongoing advice fees, that they (the superannuaiton trustees) should also be requesting to see the Statement of Advice to determine if the fee is reasonable for the advice to be provided.
Where is this even mentioned in the new FDS and Consent legilsation. The consent form has to clearly state what services are going to be provided for the fee, why the extra administration to have to provide a copy of the relevant section of the SOA to confirm this.
What are the Privacy Act provisions in relation to this considering it is very specific about what can be pased on to other organisations.
Danielle Press has shown time and time again that she has no practical knowledge on how the relationships between advisers and clients work.
Where are Jane Hume and Josh Frydenberg who should be jumping all over this out of control regulator.
Drum roll please…
Wait for this headline from ASIC…
“ASIC announces if you are in lockdown you get an extra 14 days to comply with all of the current rules for SOA and ROA and FSCG and AAA and FDS and if you are in SA then just an extra 2 days should do it which we think will really help advisers to reduce their costs”
ASIC maybe a little less of the keystone cops and bring SOME TANGIBLE changes that will actually make a real difference for advisers (and their clients) lives…!!! PLEASE.
How about stopping the constant adviser bashing especially in the media. That just might encourage consumers to actually seek and WANT to pay for good quality advice.
Perhaps the quickest, most efficient AND effective way of improving the issues is to replace every single one of ASIC’s current staff. They have no idea what they’re doing; they have little to no experience in the fields they’re ruling over; they play power games constantly and toy with good advisers’ livelihoods and reputations like they’re nothing; and they have no place being involved in the areas they are. If the group was in the private sector, I’d imagine at least 80% of them would have failed their positions and would have been replaced. But because they’re public servants they’re in for life regardless of their incompetence that’s resulted in the ridiculous system we currently have. It’s called INCOMPETENCE.
Possibly one of the saddest stories I have ever read. In what world should an industry ever be in a position that they allow/decide that the regulator is to be their champion for change? Are we at such a low point that we are falling to this last bastion of hope.
This is the same regulator that has used the power to ban people on the premise that “they are of poor fame and/or character” just because they could, and are now attempting to stop any advice fees being deducted from super. Who is ASIC really going to be working for this time round?
Come on associations, let’s make an attempt to shut this ASIC project down before we find that more ludicrousness is brought to bear on us. Do we want the outcome to look something like the case where only robo advisers are allowed to charge a fee for service? Don’t laugh, it might be in ASIC’s remit. We do not want ASIC becoming the united voice to parliament and that is what ‘consultations’ such as this then appear to be.
Remember that they were the ones saying there was churn in insurance only to then have their own investigation after the fact prove it wrong. They were the ones being wined and dined by the institutions when everyone in the industry knew the fee for no service wroughts were happening.
Why would things be any different this time? Why would they all of a sudden be on our side?
A leopard does not change it’s spots.
simple: consult us on this issue but more fully as I think they are missing client technical competence skills, reduce the red tape (what a F joke it is going to kill us), trust us again and leave us alone, respect the client/adviser relationship, recognise that they can’t regulate consumer behaviour and robo does not suit everyone, The RC was not adequate or balanced in its view, advice is not product and strategy emphasis should be tailored and so should the regulation … and spend more time chasing real felons !!!
ASIC……why on earth are you asking Financial Advisers how to provide “good quality affordable advice”? We were providing “good quality affordable advice” but then you guys and the RC Lawyers changed the system because you felt it be better for consumers. Guess what ?….you guys totally cactused it for consumers. The sad thing is you guys (ASIC and RC) got it so far wrong that it’s not even a joke, its a travesty. Just look to the UK. Just look at how our insurers are travelling. Just look at how many advisers, accountants and SMSF accountants, etc are leaving in droves. Your RG’s try to tell us how to do things so why don’t you educate us on how it’s done.
Oh My. Lets just tell ASIC to have a Royal Commission to sort it.
Hilarious. I just finished reading that ASIC et al want Super Trustees to check SoA’s and have another set of opt-in documentation. I think my clients now get told 6 times per year what they pay me. I say make it 15 times – just to be sure.
You can have
good advice,
advice at a reasonable cost, or
advice that is compliant with the current coercive laws.
Pick any 2 of the 3.
I don’t think you can have option 2 & 3 together. There is no way to provide advice at a reasonable cost when complying with the immoderate amount of rules that have to be followed these days.
You are right. Oops.
ASIC, when you quote these numbers how about providing some clarity around who provided submissions. You would not really give weight to representations from parties who are trying to sell their own product including all of those entities that are basically agents for product manufacturers by default. i.e. FSC, FPA, Uni think tanks funded by insto grants, etc.
They ‘weight-up’ the submission from CHOICE by a factor of 500.
Very likely they pay CHOICE to make a submission.
Get rid of fasea and keep the experienced veterans in for a start
Get rid of ASIC
Sadly, all the “veterans” with common sense and self respect are OUT. Apologies to those still in but are frozen with fear and apprehension and don’t know what to do . . . hint: sell up and get out for your own good – things will not and cannot improve and WILL get worse – with curent regulators and special interest groups it simply cannot be any other way. Sadly there’s no saving your clients from the regulators blatant disregard for your client’s best interests. You can only save yourself now. GO . . .