Last week, the Compensation Scheme of Last Resort (CSLR) publicly released estimates for the new levy that will have advisers paying approximately $1,186 each for the first full year period – starting from 1 July 2024 with payment expected in September 2024.
Additionally, the Australian Securities and Investments Commission (ASIC) levy freeze was lifted last year, causing it to rise from $1,142 to $2,818 per adviser. The combined levies will leave advisers out of pocket just over $4,000.
Speaking on the ifa show last week, the Financial Advice Association Australia’s (FAAA) general manager of policy advocacy and standards, Phil Anderson, discussed the compounding impact of the increased ASIC levy and the CSLR levy being placed on financial advisers and the way it could shape the future of the industry.
“We’ve got to look at the cumulative impact of everything when we consider the cost of doing business. And the cumulative impact is that now we’re talking about $4,000 a year of government sanctioned costs,” Anderson said.
“We need to be aware that businesses are struggling and that the addition of these costs on top of all the others could be the last straw that says, ‘It’s not worth it for me’.
“We’ve got to look at it as another contributor to the already heavy cost burden that financial advisers are taking.”
Anderson noted the declining adviser count since the 2019 royal commission and the industry’s efforts to recoup the losses, which has been further exacerbated by the high educational standards, will only become more challenging with the added financial barriers.
“We’ve got a profession where the numbers have declined by 45 per cent over the course of the last five years and we need to do everything we possibly can to fight to keep as many of the good professional advisors that we have in the profession now and do everything that we can do to encourage new entrants,” he said.
“Why would someone want to come into financial advice when, before they do anything, they know they’ve got to pay $4,000 to the government just to continue to operate? Two thousand eight hundred dollars for the ASIC levy, $1,200 for the CSLR. Four thousand dollars is a big ticket just to join the game.”
Anderson noted, instead of bringing the cost of advice down, these levies will raise the cost even higher, making it less accessible.
“If you think about the average practice having somewhere around 120 clients, we’re already talking of a significant amount of money per client, just as your base government costs. So I don’t think we can dismiss this,” he said.
He added: “Why do good, well-run small business financial advice practices have to pay for the mistakes and misconduct of others?”
To hear more from Phil Anderson, tune in here.
It will and you’ll be left with large “boutiques” who flog crap mda sma and take clip along the way.
I hope so. The exodus in recent years has been great for my business.
FAAA and Share Brokers Association should affiliate with the ACTU to be protected for Industrial Actions. Then FAAA can engage in affirmative actions, such as national demonstration of advisers outside of Parliament House to call for abusive Legislation against financial advisers to be repealed, in defense of the financial adviser workers of Australia, who care for the RG244 best interests of mum and dad families in Australia. The ACTU can then call for a conference with the Prime Minister, The Treasurer and Minister Jones to listen and care for the RG244 best interests of mum and dad families in Australia. The rotten hand full of bad actors should not cause the Legislative insolvency by levies of the good financial advisers who do not handle clients’ funds and who have done nothing wrong to their clients ever.
If you understand that the motives of both the big banks, AND the big not-for-profit super funds, is to eliminate independent self-employed advisers, then Mr Jones is on track to deliver.
Nothing he has done since May 2022 has alleviated the expensive imposts imposed on advisers. This government understands that if they keep making it unattractive (read expensive) for clients to seek advice independent of product manufacturers, then everyone who donates to the party will be happy. These two enemies of self-employed advisers have read the surveys from a few years ago that most clients did not want to pay more than $500 for advice.
The banks donate to Labor, not as much as they do to the Coalition, but they certainly get bang for buck. And the industry superfunds are now the biggest contributors to Labor’s election funding, even over the top of big union groups like the CFMEU, who now give a higher percentage to the Greens .
In terms of effective political representation, the FAAA lacks the necessary aggression and constant activity to even lay a glove on the ambitions of Mr Jones.
We’ve hit the iceberg, and I can still in the band playing
Definitely, YES.
Inflation is 4.4% in 2023 but here 1186% from 0%, on top of the current unethical ASIC Levy.
No meaningful policies changed so far for advice but quick in fee charging.
Where is the HOPE for this advice industry? Do we need to be a fool to continue?
The ASIC levy of $2,818 is not accurate for self licenced single practicioners that have Securities and Life Insurance authorities. My ASIC levy is;
$1,500 – Min AFSL Fee
$2,818 – Graduated Fee
$1,000 – Securities Dealer – Min AFSL Fee
$12 – Securities Dealer Graduated
$850 – Life Insurance Distributors
$6,180 – Total
+ the CSLR Levy is more like $7.3k.
+ AFCA Levy
+ PI
+ Wages (which could probably be halved if all the FDS/Opt-in rubbish is removed)
+ Rent
+ Software
+ Compliance consultant to make sure I dont get tripped up by the gobbledy gook Corps Act and ASIC Regs, AUSTRAC, Pricay Laws, Cyber security.
It’s well north of $200k just to open the doors and help 1 client. Oh and that’s without out me taking a salary or making a profit for all the risk I take.
My business is just me and one support staff member. We do annual fee renewals (No FDS’s) and comfortably operate at a profit level that allows me to collect around $350k annually via wages/profit. I think there’s an awful lot of whining on this page about what is essentially a relatively minor expense in operating a business.
Yay for you. Clearly you have solved the over regulation issue. Please share more as the rest of us are struggling. I could prob do same if just cookie cutter advice into in house mda but I choose not to. If you genuinely saying you can offer holistic advice to new retail clients not just servicing legacy clients and wholesale clients then you should share the solution.
So true
We must stand up and show our opposition to both the ASIC Levy and CSLR as they both contribute to the high cost of advice.
How do we influence political parties to counter the massive donations made by the banks?
If we are to succeed in influencing either party, you must do so at a grass roots level, for example we must attack Labor on Cost of Living as that is their Achilles heal right now.
The Liberal Party is also vulnerable on the same issue.
Unfortunately, our clients don’t necessarily believe that fees imposed on us will cause an increase in their fees. We know differently.
When we undertake reviews, we point out to our clients the high level of compliance we must undertake and the impact this has on their fees, however this will not change the voting intentions.
It is only personal safety, and the hip pocket nerve are the only ones that cause their vote to change.
Look at Queensland and you will understand why the Labor Government is in fear of losing office. In November 2024.
If we surveyed our clients and asked them which issues were important to them, I am sure that we would get a better understanding about the issues that really matter to them.
I urge all financial advisers to get behind the AIOFP in its efforts to influence both Labor and Liberals to reform our compliance nightmare.
Look at what Mortgagee Brokers achieved by being united.
To achieve a pollical outcome, we must offer our influence in exchange for what we want. This is what the Banks do and at present “The Banks tell the politicians to Jump and only response is How High”: The Banks buy these outcomes with donations…..
We cannot offer the Millions in donations; however, we may be able to offer either party Government.
Our clients are voters, and we have the capacity to influence them to vote one way or the other, by using our knowledge of what influences them.
Bennelong and Kooyong are good examples of our influence at work.
What can you do to help; Join the AIOFP and send a message to Canberra that we are united and a force to be respected.
William Mills Price Financial Intelligence
In the USA voice means election outcomes.
We as a force can run either party to think twice. I was a member of the fpa. I quit. Preferred the AFA. Now that both have united I am disgusted at where we are.
The AIOFP ought have my membership as I won’t renew the FAAA. Not any change have I seen that has given me confidence.
If each advisor has 150 clients and there are some 15000 advisors. There are some 2.25 million voters that we can educate to send Labor liberals to the bottom of the ballot.
Both are on the political nose of the public hence their recent attempt to squash votes of minor parties and independents.
Have a look at Tasmania results.
The faaa are whistling in the wind right now.
I’ve been saying this for years.
But hey if you think doing the same thing over and over again will get a different result. Good luck.
Wake up folks. Better yet Stand up.
Let’s Make Advice More Affordable says Jonsey, ASIC, etc.
Let’s increase Govt Costs through the roof to over $4K per Adviser.
Let ASIC do nothing about Dodgy Dixons with full knowledge for 01 years of the MIS and then make Advisers pay for ASIC’s incompetence.
Canberra is beyond Corrupt.
Real Advisers screwed yet again.
The reason?
Labour and ISA hates advisers and wants them gone.
It is an unmitigated disgrace that I am being asked to pay for Dixons.
Will “Qualified Advisers” need to pay the CSLR ? Of course not.
The FAAA need to start at least talking tough with press releases.
The term “Qualified Advisers” by way of example, was a deliberate attempt to confuse and deceive hundreds of thousands of people.
Compare that to what would happen if there were spelling mistakes in my FSG.
The entire charade is an unmitigated disgrace.
QAR = Royal Commission 2.0 (where is the MSM ?).