Advisers remain concerned about the government’s plan to allow superannuation funds, banks, and institutions to expand their advisory powers via a new class of financial advisers – “qualified adviser”.
While concerns regarding these impending changes are multiple, one area that brings particular unease to professional advisers is the idea of “simple advice”, it’s definition, and how it will be policed.
Speaking at an event held by PritchittBland Communications on Wednesday, the Financial Advice Association Australia (FAAA) chief executive officer, Sarah Abood, said that while the group doesn’t have a definitive answer “yet”, it is consulting with its members and has arrived at three potential ways to define “simple advice”.
Under the first option, Ms Abood suggested developing a standardised list of financial planning strategies, not unlike the current pharmaceutical scheduling regime.
“Perhaps our equivalent of paracetamol bought from a supermarket could be advice on the government co-contribution to super,” said Ms Abood.
“Whereas a schedule 8 drug, requiring a prescription from a GP, could perhaps be equivalent to something like establishing a transition to retirement strategy, that would require a fully qualified professional adviser.”
Option two would see advice categorised, based on the circumstances of the consumer.
“For example, in the retirement planning space, a client who will be eligible for the full-age pension will likely have simpler needs than one who will be a part-pensioner, so perhaps a limit could be set equal to the age pension income and asset tests, to mark the line between simple and complex advice,” the CEO said.
Option three involves allowing qualified advisers to advise on existing financial products only.
“Perhaps a qualified adviser could advice on an existing financial product already held by the client, but not establish a new one,” Ms Abood said.
She stressed that these options are currently being discussed with members, and that the FAAA has yet to reach a position.
Ms Abood also shared that the Minister for Financial Services Stephen Jones has assured the FAAA that the term “qualified adviser” is not set in stone and will be consulted on as part of the upcoming phase of consultations.
Ultimately, she said: “We all await with great anticipation the next steps of consultation on QAR.”
“The government’s final response on 7 December wasn’t long – four pages, with quite a lot of white space, quite the opposite to what we are accustomed to in terms of length. Questions remain and we are all eager to engage, to ensure these important reforms can achieve their goals,” said Ms Abood.
“And after all the effort that has gone into these, we are all very keen, I think, to see the reforms come to life in the current term of this government.”
And how do members of a SMSF get the benefit of this simple advice.
When they get to pension time, they just want a pension set up, they do not need any advice on how to set it up, they just want the docuemtns.
When it comes time to make super contributions, they just want to know what is the minimum they must contribute, how much they have contributed to date, and then how muchmore they can contribute.
Its not brain surgery, they don’t want or need an advice docuemtn, they expect their accoutnant to be able to set it up, or get the lawyer who did the trust deed to set it up.
The whole gamit of advice on the mechanics of running a SMSF has been completely overblown.
the members will use a finacial planner for thier investment advice if they are not comfortable about doing that themselves, but for the rest of it, they do not need a iancial planner to give them advice they do not want or need.
Will this ever end ?
Exhausting. Mind numbing.