In a submission to the parliamentary committee overseeing the proposed amendments to FOFA, Financial Wisdom authorised representative Menico Tuck Parrish Financial Services reveals that its clients have reacted negatively to measures implemented to ensure compliance.
“The cost of financial planning in Australia is skyrocketing,” said practice principal Jo Tuck. “Instead of working with clients to address their needs, we are spending more time on administration that our clients do not appreciate or feel the need for.
“We are already fielding complaints about the amount of paperwork that has to be signed and it does slow up the advice process itself.”
The submission pleads with the government to “allow the financial planning profession to be ‘open for business’ rather than drown in a morass of administration” on behalf of “both clients and financial planners”.
In addition to extra paperwork, FOFA measures such as the opt-in and fee disclosure statement requirements are resulting in additional costs which are necessarily being passed on to clients, the submission states.
The opt-in requirement in particular is “dangerous”, it suggests, since the requirement assumes a client who does not acknowledge the communication has opted out, and does not take into account the client aversion to paperwork.
“The danger is that a client may think we continue to monitor their situation whilst in fact we do not have the authority to do so,” the submission states.
The revelation comes despite a number of community and media stakeholders hypothesising that the proposed amendments to FOFA may water down consumer protection mechanisms.
Are you experiencing a client backlash over FOFA-related paperwork? Have your say below
What you need to remember is that until it is official, Opt-in has not yet opted out. And yes, there is definitely too much “safety” administration work happening. Protection for the consumer is essential, however what is being imposed on us is not going to stop “dodgy” operators. If they didn’t follow the rules and have ethics before, they are not going to follow more rules and suddenly become ethical. We need more checking for everyone, not more paperwork for everyone.
AEDavid are you serious, do you really belive you have made a serious, workable comment
The fact is that clients don’t get new advice regularly enough to be able to see the difference in the amount of paperwork. It is the fact that we require so many signatures every time we see the client that is frustrating. It looks too much like we are protecting ourselves more than the client. The reason for this is that too much advice is conflicted by the relationship between the product provider and adviser. Removing the conflict from the industry will remove the extra burden.
@Bones, so you assert that since there isn’t too much to sign the clients should have no problem signing an important document and getting it back to the adviser. In fact it appears that, by your submission 100% response should easily be achievable especially if it has importance to the client. Could you then please advise us why LESS than 30% of clients sign and renew their Binding Death Benefit nominations by sending these back to the adviser/fund administrator? This is one document that needs to be signed once in every three years. We will all be very interested to hear your thoughts so that this (lack of response)problem can be solved.
So, complaints from clients about the extra paperwork? what is the additional paperwork? An FDS once a year if you gave advice to a new client (post 1 July 2014). ‘Opt in’ is probably ‘out’.
What other documents must a client sign? A PDS application and perhaps other documents associated with investing. If you require a client to sign an acknowledgement they received an FSG or an Authority to Proceed that is your requirement – not a legal requirement.
Add up all of the additional administration burdens that the financial planning industry has had imposed upon it over the last ten years! How can anyone be surprised that its costing more to give advice? You know what really rubs me up the wrong way, and epitomises all of the impositions? It has become a responsibility of financial advisers to monitor for AML&CT activities, this not only imposes additional costs to do business, but, in addition, austrac charge us a fee to make sure we are monitoring AML&CT on their behalf…. Just one of many!