Speaking to the Senate select committee on financial technology and regulatory technology, FPA chief executive Dante De Gori said there needs to be better integration of technology and a review of the regulatory regime to tackle the affordability of advice.
He referred to the current COVID-19 environment, where ASIC provided relief to the sector and allowed advisers to produce a less time consuming record of advice (ROA) rather than a full statement of advice when consulting on accessing early super.
The FPA had produced a template in an effort to make the process more efficient for its members.
“We also engaged with technology providers to digitise that, so from a financial planning perspective, basically, the structure was there and it was a single-issue piece of advice, that is, whether someone should access their $10,000 from superannuation,” Mr De Gori said.
“We believe we substantially reduced a lot of the time and effort. However, many of our members were unable to use that template, or were prohibited from using the template, because the licensing regime and the compliance regime that sit behind it still didn’t reduce the work that was required by their compliance departments etc … and in fact, some indicated that they were asked to do more to justify the use of a simpler, quicker form of template and process.”
In developing its Mapping FinTech to the Financial Planning Process report, the FPA benchmarked the time it takes to provide a piece of advice as currently being 26 hours and costing between $3,715 and $6,063.
Benjamin Marshan, head of policy and standards at the FPA, commented that face-to-face time with clients is usually somewhere between six and 10 hours, with the rest of the 26 hours being occupied by constructing the financial advice document and implementing it, along with its related compliance burden.
Mr Marshan added that while the industry does use a lot of software and it could potentially speed up the process, the “biggest issue” with fintech is a lack of integration between solutions – which can create further hurdles to providing advice.
“A lot of data has to [be] manually shifted through systems,” he said.
“There’s not a lot of automation that sits there. So, what we also found in doing the research is that there is technology that will significantly reduce that cost and that time.
“The problem that we’ve found is that they don’t integrate very well with each other at this point. So you end up buying a tool that might save you three hours, but it actually doesn’t integrate with the rest of the software you’re using and therefore it actually [adds] an additional five hours to the process because you’ve got to move data around.”
Mr De Gori told the committee the time associated with compliance has “escalated over a period of time and has been added without any further benefit to the consumer”.
Liberal senator Paul Scarr had asked how the process could become more efficient time and cost-wise, commenting, “The concern I have is that cost would put financial planning advice out of the reach of many Australians who perhaps need it most.”
Referring to the $300 maximum charge on advice about early super, the senator later said, “The $300 cap is just ridiculous, isn’t it? That is just absurd … No one could [do] it for $300 if they’re jumping through the hoops correctly. Is that correct?”
Mr De Gori responded, “Yes, that’s right. For many of our members who are able to do it for existing clients, an existing client and paying retainers etc, there is some wiggle room there.
“But in terms of a new person who comes off the street and wants that simple advice, as you mentioned, it’s uneconomical. In fact, that’s part of the reason why many were unable to utilise the relief. They just couldn’t afford to do it.”
I find it absolutely hypocritical of the FPA to be providing feedback on compliance and regulation? They don’t have any idea about compliance, technology or even regulation for that matter. They sit there saying they are advocating for Advisers, but behind the scenes they will throw us all under the bus if they think we didn’t give good enough advice?? Their Conduct Review Commission (CRC) is conflicted and the staff doing the investigating is an adviser that practised for 12 months and then couldnt handle it, so he went into compliance, because he thinks he knows better.
Imagine if you provided that $300 ROA using their “failed template”, where is the accountability on the FPA? Oh that’s right, they blame technology and licensing…..how convenient, no accountability… If we built our own template and used it, we would be in deep trouble and the FPA would say – well its your responsibility and not ours…..
This is a joke right? After more than a decade of being asleep at the wheel and allowing the runaway compliance train wreck to get away, Dante now says its time for a review of the regulatory regime to tackle the affordability of advice? OMG!!
Dante, apologies but I do believe FPA have lost touch with the very people you are meant to be representing. I cancelled my registration and would suggest others do the same.
FPA asleep at the wheel again – had to grit my teeth this year to pay the fee for my CFP®
You idiot. I can see you now at the FPA conference with hundreds of Hostplus Advisers. “Where do you work..Qsuper, where do you work Hesta Call Centre, I work at Hostplus call centre and this is Bob he’s at AMP”. At least you paid for it unlike the rest of the FPA members that had some insto pay for their membership fees along with a $60,000 cheque. No doubt you missed out on the discount because of who you worked for. You can’t keep giving these clowns to keep representing someone else and expecting a different outcome. Plenty of other bodies that will do nothing at half the cost. What’s that saying about doing the same thing over and expecting a different result?
So the average hourly rate is between $142.88/hour and $233.19/hour? Hmmm.
Even when using the $233.19/hr rate for a full time 40hr/week, 52 weeks/ year full time job, that still ends up less than Dante’s annual.
I guess some animals are more equal than others in the FPA Farm.
Why provide an RoA when the client is quite capable of calling the ATO direct? At least the $20k early release finally got millions of fund members engaged to combine their super, before doing a withdrawal!
The absurdity is that the FPA didn’t whisper a word about the absurdity of $300 max fee cap for an RoA. Only the mega-fee charging FPA members go along with it, because they live in their own little universe, quite happy to see the other advisers get ground into the dirt with the unjust Opt-In requirements (that bonus collecting intra-fund advisers & advisers of wholesale clients) don’t have to comply with.
Time to stop sending the FPA membership money for fees for no service – FPA members are being screwed by the Union funds & Instos big time.
The FPA are being influenced by Union Super Funds. The big four banks have exited there membership ranks and so it’s an easy call for the FPA to replace those advisers with Advisers that work in Call Centres. Whilst you’re buried in red tape & processes, for others Intra fund advice and advice with a simple General advice disclaimer is the future now. Those funds can pump out advice docs at $300 in bulk easy. A single FPA member (regardless of who they work for) can’t compete with a spreadsheet of adviser names with fees paid in bulk and annual payment of $60,000 a year…that buys you a lot and so the only answer is to resign. If you’re head of Hesta Planning you can influence bodies like the FPA at the detriment of others.
We are so screwed with these Puppets of Large Insto’s representing us. It’s not the “RoA” document it’s the process that has to be used. Automation and digitization won’t help. Especially when FPA fees are over $1,050 a year, ASIC levies, TPB fees. The only solution left to “Professional” Planners is to leave the FPA so that self representation can win.
This highlights the impact of licensees over the advice industry. It’s all about producing legal documents for them to protect their own interests. It’s not about advice for the people. One way they could address this as a whole is standardise all the advice templates across the whole industry, but the only issue with this would be licensees blocking the move.
Rubbish. I’m self licensed and I would not have touched it with a stick. Do it pro-bono , but it was too risky and too expensive. [b]This is more about the Failure of the Advice Industry to be there when it was needed and a failure of the corrupt FPA to lobby Government over a decade.[/b][b][/b] It was always the process that needed to be followed, and it was never the document. Even with a one page document you’ve still going to have AML, fact finds, privacy issues, informed consents, invoicing and client consent, and everything else. Blame the FPA and FPA scum members for your over regulation, the licensee was just trying to protect you on this occasion.
…wait, so you’re saying this system which is definitely in the best interests of clients… is not in the best interests of clients? Mind blown.
…and the message seems to be seeping through….