The rapid decline of advisers must immediately be addressed, the executive director of the Association of Independently Owned Financial Professionals (AIOFP) said on a recent episode of the ifa Show.
Ahead of his guest appearance at the ifa Future Forum, Peter Johnston talked about some of the most burning issues in advice, including the ongoing FASEA torment.
“The major problem is FASEA,” Mr Johnston said.
“FASEA in theory is the right direction, but unfortunately it hasn’t worked out in practical terms.
“We believe there was an agenda to target advisers to get them out of the industry, because the banks and the other institutions wanted to go directly to consumers.”
Through techniques including “starvation” and “intimidation”, Mr Johnston believes the government is squeezing advisers out of the industry.
“By starvation I mean cutting revenue streams such as grandfathered revenue and also for the risk advisers, dropping the commission down too low where they can’t operate,” Mr Johnston said.
“From the intimidation point of view, saying to people their degrees and experience ‘well, we’re not counting that, you have to have a degree whether [you’re] 17 or 70’, is just ridiculous.”
To remedy the problem, Mr Johnston and the AIOFP have taken an active role in addressing political parties ahead of next year’s federal election.
“FASEA has to be really looked at after the next election. We think that anyone with 15 or more years of experience shouldn’t have to have a degree because they’ve got sufficient practical knowledge,” Mr Johnston said.
“The government has obviously disbanded FASEA as an entity, which means nothing because the legislation is in place.
“The other one also is the compliance regime, it’s just ridiculous, it’s duplicated. I personally think they know it’s frustrating advisers and driving them out of the industry, which is what they want.”
Join us at the ifa Future Forum, for free, next Wednesday (17 November) to hear Peter Johnston tackle the most burning issues in advice today.
I think a lot of the comments here are mixing up or conflating two very different issues –
. Passing the exam and / or satisfying the education requirements does not make you a “quality” adviser;
. Secondly, many of these “quality” advisers are quite happy to work as ARs / CARs for vertically integrated Dealer Groups and delude themselves that they are meeting the BID and have no conflicts of interest – whilst putting > 90% of their clients money in the Dealer Groups owned SMA / MDAs.
Frankly this is garbage and again shows how messed up this Industry is.
The aim was to make us all more ethical. Now we need to charge I believe on average $6,000 for financial advice to make a living?! Personally I find that unethical. How do we live with that as advisors? Go to more training sessions on how to show your value?!!!!
If a client were to sit down opposite me and explain how in their job, they were working under great stress and liability, plus having to charge their clients for ten hours of work, whilst really only two of those hours actually represent substance to the client, a wise financial planner may suggest to that client that they look for another occupation……
So for those on their high horses saying that it’s good riddance to the advisors who have left, perhaps self-reflect a little.
and what about the ones already left..,? compensation..?
The plan is to just have the Industry Funds, the IFM network, ASIC / APRA shaming certain funds for bad prior year(s) performance, unlisted assets held by Industry funds that are re-valued when it suits them, jobs for failed Labor Premiers and Union hacks, a constant stream of fees and “donations” to the political wing of the Labor Party and the rest of us can get …ffed.
Spot on.
A 70 year old widow walked into my office yesterday looking for a new adviser as her longstanding adviser had left the industry. She rents with her daughter, receives a Centrelink Age Pension and her only assets are her personal possessions and $140K in super. Under the current regime and “Best Interests Duty” I cannot justify taking her on as a client that is commercially viable for my business and fair on her. Does anybody have any suggestions or thoughts on this ???
Perhaps one of the “Finfluences” could help her out. They have podcasts and other great stuff to help people.
ASIC do not seem to have a problem with this sector of the advice market.
I was getting that at least once a week. People would be crying and begging for help. I can’t say no and I love to help people…..But we’re at the stage where a spelling mistake in a SoA means you fail the best interest legislation. I don’t do Insurance advice, I just gave up on super switching advice. My advice is screen them out, get them to “apply” to become clients and treat new clients as if they’re applying for a job. That way you won’t have to deal with Crying Australians desperate for help.
Your prospect should be able to find the advice she needs on Tiktok. Jane Hume has no issues with it:
https://www.ifa.com.au/news/30110-hume-says-policing-tiktok-advice-would-inhibit-innovation-progress
Too late. 50% of advisers will be gone by the time we’re done. Sorry folks, historically too many fingers on the advice industry pie. Too many conflicts. Yes, it subsided advice – but kept many participants in the game that just weren’t up to standard. The moment in the mirror has come. Yes, less advisers. Yes, increased cost of advice. Yes, less Aussies will have access to advice. Yes, better quality of advice and satisfied clients will eventually be the norm. Get on with it. Either evolve or become redundant. Plenty of room for quality advisers in the industry that are willing to roll up the sleeves, sit an exam and do some basic studies – that’s it.
I love studying, so that’s not a problem. But those leaving are often taunted as not being up to studying. It seems to be assumed that is the reason so many are leaving.
But I don’t believe that is the main issue. The real problem is the amount of compliance. The passion of the job gained from helping the client now only takes up a very small part of the time spent on the job. For those who really enjoy grinding administration and follow ups it’s an excellent profession still!
All of that compliance, apart from being mind numbing is really saying, “you are not trusted”. What a lovely feeling…..
as a risk only adviser tyou think I need to be qualified in all of the other garbage? Really?
yep peter, outside of fasea, I am happy to seek damages from the govt for unconscionable conduct, not fit for purpose (levy), special disadvantage cost and uncertainty, unclear legal frameworks and inactivity on delivery, void of competition policy and rules, and exemptions for other participants are a few ideas a good barrister could help us with. bring it on. I’ll warm up the mack truck.
IFA should not post comments unless a name is next to them have a look at FSAdvice no name then no comment
Being able to post comments anonymously is vital as it allows discussion. Are you wanting to know their names to dox and shame them for not following the narrative and having ‘wrong think’?
Agree
It angers enormously that FASEA has done its absolute best to make the life of a financial adviser as difficult as possible for as little remuneration as possible, with all possible accountability still on the adviser AND quashed any ‘potential’ conflict of interest we ‘may’ have with a client YET we have this organisation and most federal MP’s operating without any same ethical and professional boundaries.
The hypocrisy shown by regulators in this industry and our Government could not be any greater – so I agree with Peter here. There has been a very deliberate agenda to wipe us out. What I don’t understand though is ‘their’ end game. How are clients going to be better off and get high quality advice if there’s not enough advisers to provide the advice?
The carnage caused by this Government the last 6-8 years has been nothing less than devastating. Go’m Peter….you have my absolute support.
Spot on Billy…allowing payment of advice fees through super will make it much more affordable for a lot of people..adding to that more ROA’s and deductibility of the fee.
Experience is not enough to be a member of a Profession. Education is a key ingredient. Get a degree or get out. Abolishing GF commission was the right path forward. The majority of those remaining in the industry could not be happier about the structural changes. Stop complaining or get another job.
“Get a degree or get out”. What an awful unsympathetic comment, wouldn’t like to be one of your clients.
It is simply not necessary or practical for many of the older advisers with years of experience to go back to university now. I’m talking about those within a few years of retirement.
They can remain professional and keep up with their required knowledge through many other means, some of which we know are compulsory.
A little bit of empathy and common sense might help.
Majority hah? What absolute rubbish.
Why would you wish to remain anonymous
To avoid ASIC’s scrutiny. I trust them as much as I trust Daniel Andrews.
I have degrees in Accounting and Commercial Law, Diploma of Finance and Diploma of Financial Planning and 41 years industry experience but yet the regulators said “not the right degree”. So do I go back and get the right degree or get out? Or do the regulators perhaps say “hey there are extenuating circumstances here we need to consider”?. You appear to be discounting the fact that there are two types of degrees….one from a “University” and the other from “The University of Life and Real Life On The Job Experience”. I have worked with Uni Grad’s who talk straight out of a text book with little relevance to the real life client scenario they are dealing with. I have also worked with exceptional advisers who learnt their craft on the job and with specific on the job training and courses the advice industry stipulated at the time. There needs to be some recognition of prior experience because I can tell from my own experience that a degree doesn’t teach you everything that you need to know “on the job”.
I 100% agree. The vast number of the comments to this article, and that Johnson was asked to make comments at a Future Forum just shows why the industry needed tough changes to future proof the profession for quality advisers.
Surely Arrogance is not part of FASEA Standard 12, it must have been something you excelled in whilst obtaining your degree!! After 40 years as an Adviser I would highly recommend you polish up on your EMPATHY for your colleagues
I left because of ALL the BS in this profession/ industry. I found better income streams with less hassle and stress, any adviser that stays in and wants to compete against this madness has rocks in their head.
Nonsense
Great work Peter, really I am wondering why I am a member of the AFA, the silence is deafening
Cheer Again Peter for speaking the truth.
[b]Frydenberg OUT
Hume OUT
Ms Press OUT. [/b]
And get some Real Advisers involved to start a proper Reg reduction review.
Finally some words of commonsense
Is there a possibly of a class action around these issues , just ahead of the next Federal election
Well he isn’t wrong. But it will fall on deaf ears. The libs will be looking after their banking mates. The ALP will be looking after their union fund mates. The only people looking out for clients, the advisers, will be ignored with the hope they disappear. In the end it will be the clients who lose out the most.
Finally someone calling it out for what it is. Thanks Peter. Keep telling them the truth and eventually some sense will eventuate we hope.
He should try to organise fund for a class action…again.
Give it 5yrs… All the whiners will be gone and we can get on with it…
Really ? And what about the general public who cannot afford advice ?
Same as the general public that can’t afford a car or a holiday. Stay at home.
Why not put a name to your comment
Easy to hide behind anonymity
Am I arguing with myself again?
Widespread criticism of ‘The Government’ isn’t going to serve any useful purpose. The whingeing needs to stop. The simple fact that an adviser has been in ‘the industry’ for a long time, does not automatically mean they are providing high quality & ethical advice, which meets today’s standards.
Focus on meaningful changes which can be implemented in the existing compliance regime, which will actually drive positive change across the industry. eg. Standard 3 of FASEA, lifting upfront insurance comms, enhanced recognition of prior learning & experience, making it easier to charge advice fees through super, tax deductibility of upfront advice fees, more ROAs & less SOAs. Find ways to get more Graduates into the profession!
There are many practical changes which could be implemented, which will make life easier for advisers and give a better outcome for consumers.
Hi Billy,
If you had any idea of what the AIOFP are advocating you will find 2 of their biggest pushes are:
– lifting upfront insurance comms,
– enhanced recognition of prior learning & experience,
Might be worth a look Billy to actually see what they are doing rather than criticising the only Association really supporting Advisers.
Well said Billy Much more positive than the 5 year comment above
The only problem with your suggestions is that they all need Government sign off! The only thing the pollies care about is themselves, hence the idea to target marginal seats, In my opinion, the AOIFP have been the only association to call a spade a spade.
Well said as usual Peter, great work. Such a breath of fresh air compared to AFA & FPA – you actually DO something! Cheers!
Real Advisers please show support and join a Real Adviser Association, the AIOFP.
Not saying Peter Johnston and the AIOFP are perfect.
But seriously how any Adviser pays fees to the FPA and AFA, to get stabbed in the back for the benefit of their own inflated wages and Banks / Institutions benefit is beyond me.
“you actually DO something”? If you count relentless whinging as “something” maybe. But he lacks in delivery. There is no “action”.
100% accurate. The LIF was funded by the RSC which is the insurers and banks