On the back of its newly announced “engage and enrage” campaign, the Association of Independently Owned Financial Professionals’ (AIOFP) Peter Johnston has said government must make some big decisions in the coming months or it will miss out on many votes within the financial advice sector.
“We have a message to the current government – eliminate the ‘kill adviser’ theme from your legislative agenda and incorporate concessions for those experienced advisers to ease them out of the industry. Otherwise you will have 20,000 advisers, 50,000 employees and 4 million clients potentially voting against you within five months,” Mr Johnston told ifa.
On Monday (10 January), the AIOFP called on financial advisers across Australia to put aside political differences in a bid to unite and incite change within the sector and outlined five amendments as part of the campaign including:
- The FASEA exam to be held after the degree course is completed
- Advisers with more than 15 years’ experience do not need to complete a degree course but must complete an ethics unit
- Risk commission to be increased to 85/20 per cent with a 12-month clawback
- Opt-in to be every three years but clients can opt out at any time
- The proposed compensation scheme commences from 2008 as commissioner Kenneth Hayne instructed
“This is an industry in an appalling state of affairs and this government is solely responsible,” Mr Johnston said.
“Everyone wants a professional industry but it should be over time with new entrants needing an appropriate degree and compassion shown for the experienced.
“The 1.2 per cent adviser complaint component annually from AFCA and ASIC’s 627 paper showing 89 per cent of consumers respect their adviser is a great indication consumers are being well looked after by their advisers.”
In December, the Labor Party promised to significantly ease the education requirements on existing advisers by axing the need for experienced advisers to return to university that received mixed reactions by the industry.
Readers of the ifa have referred to Labor’s proposal as both “ridiculous” and “sensible”, but the Stockbrokers and Financial Advisers Association (SAFAA) applauded the move with chief executive Judith Fox calling it “good policy”.
This is rear-view mirror stuff from the AIOFP
I’m still scratching my head as to why the completion of an university ethics subject is required, post advisers passing a FASEA etics exam inorder to continue advising. It sounds a bit backward to me, that after passing the exam, you have to go back and study the subject again?
I will be voting Labor for the first time in my life. Ditto my wife, my kids, employees and a number of clients. We have had a gutful of this shocking Coalition government. Their politically motivated attack on financial advisers and our clients had been breathtakingly stupid. Financial Planners were the Coalition’s secret, silent weapon. We were rusted on supporters, who influenced large numbers of voters. I know Labor is a risk, but I want this current mob out. Hopefully the Coalition will reflect on their sins from opposition and come back rejuvenated in the future. But then again, Labor may seize on this opportunity and keep our votes if they play their cards right. Time will tell. But right now Labor is the only party that appears to be listening.
Maybe vote for an independent who won’t preference liberal, labor or greens because most in those parties are spuds…
Agree with this – for me it is not Liberal but neither is it Labour. Let’s give the others go.
Same as the bushfires, COVID or simply FASEA … they wait until a catastrophe before they lift a finger and then it’s far too little, too late. No proaction, all reaction.
I would have been quite pleased 6 years ago with AIOFP work in regards to FASEA exemptions for experienced advisers and fixing the FPA’s mess they created with the whole degree being worth only 20 points…..but in year 5 I just got on with it…the biggest mess of all is the lack of representation Advisers have, we’ve got an in effective FPA that is trying to represent Hesta and then an Adviser somewhere and these guys being just a industry body. We don’t have a Professional Body in Australia that is for Advisers.
Peter, good ploy against the Liberal govt however I don’t think you should assume who I will vote for – I am one of your 20,000 – though I understand the number is closer to 17000 now.
I think Labour will be just as bad to us- judging from their ‘holier than thou’ attitude and plan to implement ALL RBC recommendations.
I also don’t agree with your push to get experienced advisers off the hook- with respect to degree requirements. It has always astounded me as to how poorly educated some advisers are and yet they advise on clients entire lifetime savings/super.
There is enough time to get diploma /degree requirement completed – if you don’t have the mental calibre to do so, you shouldn’t be advising people on protecting or building their wealth.
That looks a fair and balanced request for both sides
Nail on head Peter…not sure the Libs can recover any support from the FP industry now – too late!!
Truest thing ever said:
““This is an industry in an appalling state of affairs and this government is solely responsible,” Mr Johnston said.”
Quote of the year!
Agree with the first bit but the industry itself has to take most if not all of the blame. And as for Johnston’s recommendations, two show so clearly how he wants to protect the stars quo, in fact make it worse. Exemptions for advisers >15 years? Just more grandfathering – which has left this industry behind. And increase risk commissions? If that’s not to protect the old riskies I don’t know what is.
‘Protect the old riskies’, or maybe just allow insurance advice to be provided economically for those clients who can’t afford to pay an advice fee.
but the facilities to provide insure economically is already there using robo advice.
Too true, as is SMSF, cryptocurrency, direct share investing, ETFs etc etc. That doesn’t mean people know what they are doing. That’s why we are here isn’t it?
enter data get a generic soa….. economic yep, nuanced no.
The big problem with all this “industry itself has to take the blame” sentiment is that advisers don’t control the advice industry. Product companies do. It is a flow on from the advice licensing and regulation model which is designed to suit inhouse product distribution rather than individual professionals. The most powerful forces within “adviser associations” and in direct lobbying to government on advice issues, are ultimately product companies that control advisers via the licensing model.
Only once the licensing model is reformed to allow direct licensing of individuals, rather than advisers being beholden to AFSL holders, will advisers have sufficient control over the advice industry.
I half agree with this comment. Yes the Royal Commission failed in outlawing vertical integration of products which is a vary big conflict of interest. However there are AFSL’s out there that allow you to use any platform and most underlying investments.
What has failed us in the industry bodies like the FPA that has just agreed with everything the government has said (both Libs and Labor).The other issue is larger groups getting in the ears of government to get rules changed that will make it impossible for a small self licensed advisor to survive, effectively reducing their competition.
Sure there are some AFSLs without inhouse products, and there are some self licensed advisers. But these are still in the minority due to the costs and complexity of the product focused licensing system.
This minority group is slowly growing and is finally having some influence over FPA policy. The FPA recently announced a new policy that supports changing the licensing model to focus on individuals. However it has already run into significant opposition from dealer groups that make money by forcing advisers to sell products such as inhouse SMAs and SMSFs. Don’t be surprised if these well resourced dealer groups manage to kill off the FPA proposal, just as so many other well meaning attempts to reform the industry from within have been squashed by the product companies that control most adviser licensing.
Hear hear
Jen, the industry is not to blame. It’s parliaments who are responsible for putting up the shambolic legislative frameworks under which we operate.
Why does government chronically give the regulators significantly less money than what they actually need? Why is legislation drafted in an vague, often incomprehensible manner, so that a court has to figure out what it means (e.g. ‘taken any other step’ in section 961B of the Corps Act)? And why aren’t advisers directly licensed and audited by the regulators, instead of licensees with their own conflicted interests?
Where the industry can take blame is from its hopeless inability to lobby properly – if only we had representatives who can follow the example of heavyweights such as the Minerals Council and the Pharmacy Guild, instead of tumbleweeds like the FPA.
No funds to lobby govt effectively. Conumer groups are given millions every year…financial advisers struggle to raise any such war chest,,,the AFA and FPA dont seem to allocate much if anything to lobbying govt by comparison.