In a recent communication to members, AIOFP executive director Peter Johnston said financial services minister Jane Hume’s recent comments that the reforms were necessary to “ensure that fees are not being charged invisibly” was “another example of the government playing politics to justify their actions”.
“We have had a number of members reporting their clients are getting annoyed when confronted with duplicated compliance paperwork and then angry when they work out who is actually paying for it,” Mr Johnston said.
“This ‘invisible fees’ ruse is completely rebutted when clients are clearly confronted with the facts on fee disclosure and who is ultimately paying for this compliance nonsense.”
Mr Johnston was responding to a recent ifa report, where Ms Hume indicated in correspondence to adviser Steve Blizard that the reforms – due to come into effect on 1 July – were necessary to help clients make informed decisions on the fees they were being charged.
Mr Johnston said given that fees were disclosed “no fewer than five times” in existing compliance documents, “to imply that there are still existing ‘invisible fees’ is treating consumers with a high level of contemptuous stupidity”.
“It is also showing no respect for the close and trusting relationship advisers have with their clients,” Mr Johnston said.
Additionally, Mr Blizard commented that the obligation to renew fees annually still did not apply to intra-fund advisers, although reforms had been made to the way trustees disclosed intra-fund advice fees to members.
“In line with ASIC Regulatory Guide 97 issued in November 2019, all industry and default funds charging intra-fund fees were required to disclose in their updated financial services guides that fund members were being collectively charged for advice fees. Until then, there [was] minimal disclosure,” Mr Blizard said.
“Yet fund trustees are not required to insist that the millions of fund members paying these fees provide informed consent.
“Most of these MySuper fund members have no idea they are paying over $100 million [a year] in ongoing personal advice fees to over 1,000 intra-fund personal financial advisers, none of whom are required to obtain annual renewals for their ongoing remuneration.”
Im sick of these bloody dopey politicians
Stuff it – I’m just going to charge clients $10,000+ per day, just as the QCs from the Royal Commission do. After all, like so many other advisers, I’m far more skilled than they will ever be.
I dream of a day when the FPA and AFA stand up for financial planners like the AOIFP. It is a disgrace they sit back and do nothing while we are vilified and persecuted. It would not be tolerated by other professions. Why anyone pays membership to those pathetic organisations is beyond me.
That is why I am not a member of either and have not been for over at least six years, toothless tigers and blood sucking leeches.
I felt the same, however Phil Anderson is extrememly good and taking it too them now!
Dante? not up to the task
Don’t dream, just act and be AIOFP member and ditch FPA & AFA.
The AIOFP ain’t perfect but they really do represent Advisers. We have been members for 16 years.
The FPA & AFA represent themselves first, institutions second and Advisers get represented about 10th down the list.
The definition of insanity is sending the FPA more money, simply to help them destroy your business.
Peter Johnston is right on the money here. It is utter stupidity borne out of a desire to punish financial advisers for the transgressions shown in the Royal Commission.
The legislation works. It is making the life of financial advisers an expensive and distracting misery.
However, it is the same as if we asked doctors to work with one hand tied behind their back – they could see many fewer people and would do a worse job, harming the clients.
The same is happening here. Distracted and needlessly occupied advisers have to charge their clients more and let more clients go and many have left insurance advice altogether.
It is not the government’s fault. It is the demand for revenge expertly fanned by the Royal Commission and caused by the product providers’ greed and the advisers’ acquiescence to the compromised position they allowed, so that the Australian public is now cutting off its nose to spite its face.
What do you mean ‘its not the governments fault’?????
The Labor party wants us out of business – hence the sleeper FoFA issue that erupted 6 years later. It was unworkable from the beginning but that was not obvious.
The Liberals don’t want us to constantly create problems, so they do whatever they are forced to do and right now we have a particularly sensible minister but she is still forced to enact the current legislation, as ugly as those laws are.
The message has been clear for years – get rid of conflicts that affect your work, in particular don’t let product providers run us. Once we have dealt with that and we stop being an ongoing distraction and sore to the Liberal government, then things can change dramatically.
Brilliantly versed. I could not agree more.
Hume is incorrectly assuming people are like her ie “a high level of contemptuous stupidity”.
Senator Hume, do you not know yet that the only “invisible” fees are those charged by Industry Super Funds? My clients have not had “invisible” fees for over 20 years. None of them are in Industry Super Funds. Don’t keep repeating the mantra (whether straight out or by implication) that advisers are thieves and cheats. We are NOT. Don’t keep treating advisers as big bad bogies (or chickens in the hen house). We are NOT. Stop attacking the very people who are doing their damnedest despite the barriers being placed in their way to just give their clients the very best advice available. Look beyond the Hayne Royal Farce, beyond the media trial of a very few rogue advisers, and see the great work that is being done, by increasingly fewer conscientious advisers. In other words, GET REAL Senator Hume.
and mortgage brokers.
Incorrect. Mortgage broker commissions are fully disclosed to clients upfront. Just like life insurance commissions. Mortgage brokers also have to comply with a best interest duty now too.
these double standards will be perpetuated whilst there is so much vested interest. An adviser who received a commission from a corporate plan, provided service to the plan and occasionally gave factual, general and sometimes personal advice to members is no different to an industry fund and its charging of intra fund advice to members. It just appears that doing it on an industrial scale is ok.
Hypocrisy is the order of the day.
Pollies and ASIC forcing FASEA study and ethics on Advisers but not themselves.
Pollies and ASIC forcing multiple FDS Optins on Real Advisers but not Intra Fund Advice / sales.
Congrat’s once again AIOFP…..Do not renew FPA fees this year….direct them to a body that will act for you and not AwareSuper or whatever insto’s they get payments from….at least these guys aren’t afraid to ask hard questions. Clients are sick of filling out forms,,,are being pushed to sign things digitally and that is not easy with two factor identification that some firms require and many couples only have one email address. That static anniversary day is a nightmare in a Covid environment.
Sowing division. I wonder why.
Yes, we shouldn’t divide, we should work together, but its been years and years of both afa and fpa working separately, and achieving not much in the grand scheme of things. We need to have one organisation only working for its members, then for everyone to join that organisation so its strong and something to be reckoned with. Untill that happens we won’t get change, or respect.
Get rid of the FPA – then no division mate.
The government is using financial advisers as a convenient distraction from their lack of achievement in any other aspects of governing.
Invisible fees- what about the continual wage rises for public servants and government charges?
What about politicians overnight becoming lobbyists – no harm? We all pay for that conflict.
Total hypocrisy.
This government plus the opposition are anti-advisers.
I’ll vote against them no matter the outcome.
Phil Collins has a song called Invisible Touch which he wrote for the 3 clients that have no idea what they are paying to their advisers??? They also don’t know what their loan interest rates are, nor their utility costs, nor their council rates. Apparently they do know the lyrics to Invisible Touch though…
What about product providers, who are not allowing advisers fulfil these legal obligations, by only allowing fixed term contracts to be put into place where the adviser and client intend to provide ongoing services with no end date?
How can advisers meet the consent obligations if the product provider refuses to provide or accept OFA consent forms, and insist on non ongoing fee consent forms to be used, otherwise they won’t pay advice fees. The obligation is on the adviser not the product provider in respect to OFA obligations.
The more expensive it gets to run an advice practice the harder it will be for self licensed practices and the easier it will be for the big players to get back onto the gravy train.
What like union funds financial planning?
Correct, it worth explaining the situation to clients and raising with their local member.