ASIC’s Consultation Paper 329: Implementing the Royal Commission recommendations: Advice fee consents and independence disclosure, released on Tuesday, outlines the corporate regulator’s proposed approach to implementing the recommendations.
ASIC said it would develop three legislative instruments outlining the written consent fee recipients must receive from clients before arranging to deduct ongoing fees from a client’s account; the written consent super trustees must receive from members before allowing ongoing fees to be deducted from their account; and prescribing requirements in the statement providing entities must include in their financial services guide around lack of independence.
In terms of the new fee permissions from clients, the corporate regulator said it would be consulting on whether written consent forms would need to include information about the services to be received by the fund member or client under the ongoing fee arrangement, given this could be unnecessary duplication as the consent would often be sought at the same time as an ongoing fee arrangement was being entered into.
The list of proposed requirements to be included in the consent forms included the name and contact details of the account holder, an explanation of why the account holder’s consent was being sought, the services the client was entitled to receive under the arrangement, the frequency, amount and time of each payment deducted from the client’s account, details of benefits in the account that could be eroded because of the fees, the expiry date of the consent and the option for the client to withdraw their consent at any time.
In regard to new disclosure of non-independence requirements, ASIC proposed advisers would need to disclose on page one of their financial services guide, or supplementary financial services guide, if they did not comply with the definition of independence in the Corporations Act.
However, the regulator said it was open to consultation around how else to achieve the ‘prominent’ display of disclosure required by the recommendations of the royal commission report.
ASIC also said it encouraged advice firms to “collect and analyse consumer data” in relation to the effectiveness of disclosures of conflicts of interest, and that the regulator intended to monitor the implementation of the proposed requirements.
“We may reconsider the requirements in the proposed legislative instruments if we find they are resulting in adverse consumer outcomes,” ASIC said.
[quote=F’d Up]Or maybe we can itemise the fees and break it down with a pie chart.
A. This portion of your fees covers the cost of ROAs/SOAs (which you are unlikely to read and are not required to be provided by any other profession)
B. This portion of your fees covers the cost of an FDS and Renewal Notice (for fees you have already agreed to, see in your statements and you can turn off at any time)
C. This portion of your fee covers additional note keeping required by ASIC (duplicating work already completed constructing SOA’s)
D. This portion of your fee covers our registration with the tax practitioners board (even though they don’t provide any training or give us access to the ATO tax portal)
E. This portion of your fee covers the cost of keeping up with FASEA Code and CPD hours that exceed any other profession
F This portion of your fee covers licensee fees, for a firm you have no relationship with, delivers no value or service to you and whose employees you will never meet.
G. This portion of your fee covers the cost of ASIC, a mob of bureaucrats who think they know better than you, who have pushed most of the above costs onto you instead of focusing their attention on identifying and eradicating white collar criminals[/quote][quote=F’d Up]Or maybe we can itemise the fees and break it down with a pie chart.
A. This portion of your fees covers the cost of ROAs/SOAs (which you are unlikely to read and are not required to be provided by any other profession)
B. This portion of your fees covers the cost of an FDS and Renewal Notice (for fees you have already agreed to, see in your statements and you can turn off at any time)
C. This portion of your fee covers additional note keeping required by ASIC (duplicating work already completed constructing SOA’s)
D. This portion of your fee covers our registration with the tax practitioners board (even though they don’t provide any training or give us access to the ATO tax portal)
E. This portion of your fee covers the cost of keeping up with FASEA Code and CPD hours that exceed any other profession
F This portion of your fee covers licensee fees, for a firm you have no relationship with, delivers no value or service to you and whose employees you will never meet.
G. This portion of your fee covers the cost of ASIC, a mob of bureaucrats who think they know better than you, who have pushed most of the above costs onto you instead of focusing their attention on identifying and eradicating white collar criminals[/quote]
Seems about right…
Just an idea – why can’t ASIC seek input/guidance from CLIENTS (both existing and potential) around what they want from Service & Advice providers? We have so many clients who don’t want FDSes or Opt-Ins or even SoAs and complain whenever they get one. They see no value in any of them, they don’t want to pay for something they don’t want (we charge on an hourly basis for the preparation of them) as all they want are service and advice and an idea of the costs associated with that advice. So given the fact clients COMPLAIN about receiving these documents which are supposedly ASIC’s solution to ensuring a client’s Best Interests are the primary consideration, how do they explain that clients see their Best Interests best being served by NOT receiving such documentation?
As an aside, when was the last time anyone received an FDS or Opt-In for the gym they rarely use? Or our politicians and ASIC public servants’ “services” and costs? So why are we the only industry expected to provide them?
Hey Frydenberg and ASIC – here’s a novel idea – LETS LOAD UP THE BS RED TAPE REGUALTION TRUCK YET AGAIN AND DUMP, DUMP, DUMP A WHOLE LOAD MORE RED TAPE USELESS COSTS INTO THE SO FAR OVER REGULATED MESS OF GOVT / ASIC BUREAUCRACY GONE MAD FINANCIAL ADVICE.
unbefreaking believable !!!!!!!
[b]Frydenberg – you are a Labor plant into the Liberal party for sure. [/b][b][/b]
My clients’ account is not eroded by my service and fees. I add value and that’s what the document will say.
showing how ”the account..could be eroded because of the fees..” this is the piece that is treating Advisers like naughty children and trying to embarrass them. Ok, clients essentially go on fee for service. fine with that. No different to lawyer and accountants. Ok, but those professionals do not have to do projections how their fees erode the clients bank balance? bridge to far on this one. The rest, well if at each review you get them to opt in – should be fine for client that value the service and there are plenty that do.
“[T]hose professionals” dont, in the main, charge an annual or ongoing fee. Here’s anovel idea, if you do the work and then bill your clinet afterwards like every other profressional you can aviod all of this … it means gearter risk to your cashflow, but the choice is yours.
Hey Max use your Headroom – most Accountants set up monthly fees for many clients that require more than a basic tax return and they pay their $5K pa, $10K pa or $20K pa accounting fees via Monthly debits account payments.
Sounds a lot like Financial Advice fee for service fees to me.
and I bet in front of you, is a call centre board that states 10,000 in the Queue and you’ll charge the next person (you call them customers) $150 for advice to sal sacrifice into super. So you think a better approach is to provide once off advice and bail on the customer and move onto the next transaction. Perhaps just wait and when the phone rings from the client ( i mean customer) (that I provided ad hoc advice to three years ago) I talk to them about a 20% sharemarket drop and send them a Bill for a HOLD Statement of Advice for $3,000.
This is bang on. I have no issue getting an annual fee form signed by my clients, or telling them that it’ll erode their balance. Risk polices coming from their super does anyway so it’s just another disclosure. What I have a huge issue with is that a relationship based on the intangible benefit we provide is being shoe-horned into Shipton’s idealistic and simplistic view of professionalism. Managing a client through their wealth journey isn’t a one and done hourly transaction, that’s bank thinking that put us here in the first place. It’s the reassuring chat when the market goes to shit that I don’t charge for that makes it worthwhile.
Hi Max,
So a client of mine died last week, when I speak to his widow, should I charge her by the hour?
Yes six minutes increments is the standard of Professionalism according to Max. Average time to answer an enquiry in an Industry Super fund call centre about setting up someone for their entire future is about 10 minutes, i.e it only takes 10 minutes to tell someone to sal sacrifice into XYZ Super as the solution to everything… and that’s the standard of professionalism we’re now held to.
You have no choice and you shouldn’t start helping her until she has signed your form. Not saying its right but it is what the system wants. If she doesn’t sign your fees then its up to the call centre to give her the correct information.
This is not the way we operate. It doesn’t matter how f’d up the red tape gets. Financial planners are caring people. We will never walk away from helping someone when their loved one dies. Lawyers and bureaucrats, who are pulling all the strings at ASIC, Treasury and FASEA will never understand this and they will never understand our profession.They are heartless bastards who would charge that widow in 6 minute increments and wouldn’t even offer a box of tissues. As Darryl Kerrigan said on the Castle, ‘tell em to get stuffed’.
Here a novel idea, Stop the erosion of clients accounts from fees for a service that may never ever be used by the member – just charge a fee when the member calls. I’m talking about intra fund advice fees.
Yep, right there ASIC has given the game away. The bureaucrats running the joint are communists, who think all financial advice should be free of charge, delivered by the Government. Any fees charged for advice, are detrimental to consumers (in their minds). In reality this has been obvious for years. Look at their Money Smart website. It’s a free government service, where they try to dish out free advice. Except it is ridiculous, naive and makes outrageous and embarrassingly ignorant comments. But it’s free, so there is not detriment to consumers (yeah right!)
banks win- game, set and match.
Sorry ASIC but either all our staff, or the client that needs to consent have Corona Virus and we’re unable to comply. According to ScoMo you’re un Australian if you don’t cut me a break.
I’m providing a Renewal and a FDS letter that states for $4,000 you’ll get 1 email a year. simples. Can’t be bothered listing everything and run the risk of of going to jail because I left off the Christmas Card I promised. Pretty much that’s what it’s come down to.
If a client signs an annual contract, then it should be up to the adviser to list whatever they want to list. For example, if I just write a sentence stating, “Please sign below to consent to $x being withdrawn from your account over the following 12 months”, that should be sufficient. If I want a 2-pager detailing everything I am going to do, then great as well. Annual opt-in should not require burdensome compliance. If a client is not happy, they will leave.
Well that would be commonsense wouldn’t it.
Once again ASIC has jumped the gun.
How can they be discussing all of this without the actual legislation having passed through parliament and therefore what the requirements are going to be?
When are ASIC going to actually look at how their theoretical proposal will operate in the real world. This is going to be an administrative nightmare and clients are going to think we are all crazy with all of the additional paperwork.
I assume ASIC is going to provide all of us with a crystal ball to be able to predict the benefits which will be eroded by fees.
Where is the focus on the benefits the clients are going to derive by paying the fees.
news flash Laurie…they have release their ‘Consultation’ paper. Why would like make the legislation before getting stakeholders to comment on it? seriously mate.
Of course fees reduce the benefit clients get. Doesnt anyone understand that you are to work for free. Therefore the consumer will no lose out out. When markets go into a downturn, then with no advice to guide them and with a reduced balance, they can read a book, call a call centre in Australia or the Phillipines and pay as they go. Of course this is the way ASIC thinks….get it….Not sure what drugs ASIC are on, but hey can I have some of this stuff. Bunch of damn fools.
Retirees will only have Scotty from Marketing to guide them and a media that plays to the ignorance. Regulators do not want an empowered consumer or individual. Driven by ideology and implementing BS whereever they please with arrogance to hide the incompetance of their decisions so far. Power mad idiots…. May God Help the People of this country. No leadership at all.
so I am presuming that all industry fund members will be receiving this yearly as fees are being taken from their account for advice related services if they receive them or not
Have you been seeing those “Pink Elephants” again 🙂
Here’s a thought, let’s just close down all established and overwhelmingly productive and ethical practices and establish a Federal Government controlled financial advisory offering in Australia.
Additional revenue for the Government, never another concern around ethical behavior and easy access to easy to understand advice for all.
is it not CP 329??
This has been changed, sorry for my numerical dyslexia there 🙂
For f**k sake what is ASIC doing cant they ‘see the forest for the trees’……
We must disclose ‘details of benefits in the account that could be eroded because of the fees’??? What does this even mean? Is it not enough to disclose the dollar amount of the fee? Are we supposed to run projections based on the false assumption that clients receive zero benefit from our services and our fees simply erode away a clients balance? What planet are these ASIC bureaucrats from?
Letting clients know the fee’s are far higher than they should be is a good start
Or maybe we can itemise the fees and break it down with a pie chart.
A. This portion of your fees covers the cost of ROAs/SOAs (which you are unlikely to read and are not required to be provided by any other profession)
B. This portion of your fees covers the cost of an FDS and Renewal Notice (for fees you have already agreed to, see in your statements and you can turn off at any time)
C. This portion of your fee covers additional note keeping required by ASIC (duplicating work already completed constructing SOA’s)
D. This portion of your fee covers our registration with the tax practitioners board (even though they don’t provide any training or give us access to the ATO tax portal)
E. This portion of your fee covers the cost of keeping up with FASEA Code and CPD hours that exceed any other profession
F This portion of your fee covers licensee fees, for a firm you have no relationship with, delivers no value or service to you and whose employees you will never meet.
G. This portion of your fee covers the cost of ASIC, a mob of bureaucrats who think they know better than you, who have pushed most of the above costs onto you instead of focusing their attention on identifying and eradicating white collar criminals
Meh it’s fine, slap in something like a cash out recon, start pension -“I saved you 15% tax on earnings on $1mil, projected at 7% for a growth portfolio (never mind the ~20% now!) your beneficiaries $200k tax, my fee is $10k a year and I saved you 0.05% overall costs on your old super fund. You’re welcome.” Actually bugger it invoice the beneficiaries a 30% performance fee on future tax payable now like lawyers do for TPD claims.
I wonder how this affects annual contracts?