As hundreds of thousands of jobs are lost and retail investors panic about the continuing market volatility, Sequoia Financial Group has called on the government to subsidise the cost of advice for consumers.
“Never have we seen so many once financially viable businesses close their doors, so many people lose their jobs or lose a substantial percentage of their income,” said Sequoia managing director Garry Crole.
“While the government has announced some tremendous initiatives, which can assist many through this period, a lack of understanding on where to go or how to access these benefits compounds the stressful scenario faced by many.”
Sequoia flagged the government’s early superannuation release scheme as one area where consumers require ‘appropriate advice’ about the long-term consequences for their retirement, and noted that ASIC had already raised the alarm on unqualified people providing advice in this area.
“Never in our nation’s history has there been a situation where the need for professional financial advice is so crucial yet simultaneously inaccessible for some of the most vulnerable,” Mr Crole said.
Sequoia’s proposed benefit would be limited to super fund members with account balances under $200,000 or people aged above 50 facing a “significant change in circumstances”, and would be rolled out after consultation between advisers and the government.
“If the federal government and the planning industry could work together on this problem, I expect that planners would also commit to lower entry fees for financial advice so that all Australians could have the benefit of professional financial advice,” Mr Crole said.
“I believe a subsidy, in the form of a rebate, would support Australians in need of advice and increase the effectiveness of the various support packages, which is for the benefit of all Australians.”
Advisers are better off only dealing with those that want to plan ahead and who can afford advice. Running a practice is not a charity
No subsidy is needed. Just get rid of the silly red tape so that clients don’t need to spend $5k to get an SOA.
LOL at everyone here who maybe 3 months ago was like “OHH WE HATE SOCIALISM” now because their businesses adds 0 value to peoples lives and modern portfolio theory is proving useless in a crisis, because every asset class is getting smashed, are now crying out for a govt subsidy. Eat brioche.
What evidence do you have that Modern Portfolio Theory is useless?
Well, the idea is that when stocks are down bonds are up. In GFC and now, everything is down. Cash is the only thing that people want and with 0% risk free return, MPT is useless.
But lots of choice with the funds on which assets to draw income from – how’s that going with the Industry Funds?
Really? What choice do you have, i bet you been recommending Mayfair Platinum and Virgin Hybrids and Franking Credit Bank shares.
We don’t need a subsidy. Just make the first $1,000 or so of advice fees an eligible tax deduction for goodness sake. That would save so many problems and encourage advice. We’re already regulated up the kazoo by the TPB on top of ASIC & FASEA so why not make that TPB registration worth our while and benefit clients as a result.
You’re aware that making advice fees tax deductible is the same as a subsidy, right? Except the subsidy is more for high income earners than it is for low income earners.
Fair. Yeah I get it. Rebate would be the same effect – like health insurance. The difference is subtle but similar as you point out. I think people would be supportive of a sensible change to the tax law though and I’d rather front the PR for a tax deduction than anything else. Posted by FFS
I regret that there was snark in my original comment. Thanks for not lowering yourself to its level. You’ve improved the internet for today.
You’re very polite Policy Pete!
Oh come on! Your ongoing fees pay for the advice your clients deserve. Everyone in Australia is sharing the pain and many are taking massive, if crippling, wage cuts and that’s if they haven’t been sacked. How about instead of looking after your own pocket you find your community heart and as an industry offer free advice for non clients? Once we come out of this, which we will, you will most likely have more clients and can start charging them in your traditional fashion.Sorry, Think of the massive positive PR for an industry that has been challenged and lost credibility. I’ll add that there are still some fabulous advisers who have been doing the right thing for years.
Agreed. A subsidy is not required but I’m not sure a massive pro bono program is the answer. Just a tax deduction for some of the advice fees.
PT, the financial position of people who aren’t my clients wasn’t my problem or concern prior to COVID-19 and it still aren’t. If you don’t pay my fee or are not closely related to me then go solve it yourself. The government and consumer organisations have wanted financial planners to charge like lawyers for years and this message has finally gotten through to most planners, which is great.
you know what happens when you try to reason with retarded narcissists…(aka govt/ASIC)…anyone?
Suggested this to a federal member last week, who will discuss this with Jane Hume + Josh Frydenberg. Along with at minimum, tax deductibility of advice
You may as well talked to the wind . Do you really think they care a brass rarzoo
If the govt says no to subsidising advice, they could at least get rid of some of the regulatory overheads that make advice more expensive than it needs to be.
Removing the TPB from financial adviser regulation would be a good start. Getting rid of ASIC levies would also help.
Unlikely. Advice firms are able to receive the boost your cash flow stimulus, so for struggling clients over the next few months providing pro-bono advice whilst still paying the advisers for their time (either yourself or other advisers) would help subsidise the costs for smaller firms. If your advisers need to work overtime, they need more tax withheld which will be paid for under the first part of the stimulus up to $50k for March and June quarters. You will then get that amount again with 50% for the June quarter and 50% for the September quarter. Depending on the amount of clients I could see that working. I also couldn’t see that the ATO would be able to claim this was a scheme with the sole or dominant purpose being to increase your access to the benefit. The dominant purpose is to help out as many people as possible.
Advisers should get on the front foot and see who they can help.
Whilst the revenue generated would be substantially below normal expectations / Pro Bono, the increase in clientele would stand the practice in good stead, once the pandemic is contained.
So we should work pro bono for clients to build up a clientele of clients that cannot afford advice? Even just a one strategy soa cannot be done without a 45 page fact find, letter of initial engagement, research of existing vs alternative strategy, product, investments for example, then finally the soa. You are talking 15 to 20 hours work at least, most of it just on butt covering timewasting file notes and comparison reports. This is of course to adhere to a code of practise that has basically been invented by boffins to strangle the industry and force up advice costs . The government and fasea has made it impossible to give not only partial advice but cheap advice. Its unworkable for us unless there are a lot of changes made to facilitate advice , not stifle it.
I agree with you Garry.
Perhaps your new mate Mark Bouris can help get this across the line?
hahahahahahahahahahahahahahahahaha, just saw a flying pig out the window !
Stay away from the red cordial
Am thinking this makes too much sense for our ”friends” in Canberra to comprehend.
Bahaaaa. Stop it or you will go blind