Ben Neilson, the founder of Neilson & Co Wealth Management, has published an interesting dilemma on LinkedIn alluding to the expanding disconnect between client needs and the regulatory framework.
In a post on his page last week, Mr Neilson admitted that after concluding that the mental stress wasn’t worth the remuneration, “I advised that a client should resign from her job”.
“We agreed that her happiness far outweighed the environment she was unnecessarily placing herself in”.
What this dilemma made Mr Neilson realise is that the gap between a client’s needs and the regulatory framework has increased.
“Can anyone tell me which regulatory guide or Corporation Act section(s) this type of advice falls under, please? Anyone able to measure the tangible impact of this ‘advice’ versus the more conventional advice sectors?” he questioned on LinkedIn.
“Is this even advice?
“No?
“This is why it’s imperative that practising financial advisers are actively involved in developing the regulatory environment around them. To govern, we must understand the operating conditions, to set frameworks, we must comprehensively understand scenarios and to lead we must create,” Mr Neilson wrote.
“What happens when the existing advice framework fails to meet the future mould?” he asked.
Speaking to ifa, Mr Neilson explained the rationale behind his post.
He noted that as advisers emerge into a profession and consider responses to developing client queries, ensuring that the regulatory framework can support them accordingly is imperative.
“At present, a significant weighting is placed on the SOA document, which often only includes products, figures and amounts,” he opined.
Mr Neilson pointed to research conducted recently by his firm that showed that decreasing consumer value is being placed on traditional advice documents, a finding which, he said, is at odds with the regulator’s point of view.
“SOAs stand primarily as a legal document and when surveyed, returned low levels of responsive consumer comprehension, value, and trust. Also, granted it’s the major byproduct of financial advice, do we think it’s strange that such limited research and literature has been completed in this space?
“The point surrounds, ‘rules’ being created ‘for us’ instead of ‘by us’, granted the high credence financial advice process is unique, it’s imperative that active registered advisers are included in the creation of regulation, or we may continue to see further disconnects requiring us to spend more time doing tasks that clients fail to see value in.
“Increasingly, advisers are becoming subject to comments and conversations that are incredibly valuable from a client’s point of view, but fail to fit within the current ‘moulds’ of traditional advice — what’s the solution?” Mr Neilson concluded.
Would like to know if Mr Neilson’s client had any form of Income Protection?
I couldn’t agree more – however as a practicing adviser I am far too time poor, due to the compliance burden of the job, to be too actively involved in the change currently happening. I wish this wasn’t the case but this catch-22 is possibly the same position a lot of us find ourselves in??
If you can’t find the time to take part in the discussions, don’t expect to get the result you hope for.
Financial services law is predicted on the placement of product. The retail client has a hundred other matters they wish to discuss with their adviser.
Financial Advisers are unrepresented and the associations that claim to represent advisers have different values to their members and are focused on fixing the needs to the company. i.e they’re focused on AwareSuper needs not the Advisers needs. We can’t even renew a fee agreement on a Monday if the anniversary date is Tuesday. We can’t even sign a state based stat dec..
Just as the number of clients making complaints about documentation they don’t want, don’t need and don’t see why they should have to pay for is mandatory – because the regulator doesn’t care what clients want, nor what is in their best interests. The regulator cares about ticking their own boxes and claiming scalps in their PR/propaganda exercises to justify their ongoing existence and high salaries (anyone ever looked up what a Delegate is paid??)
Cliffhanger!!!
Mr Neilson admitted that after concluding that the mental stress wasn’t worth the remuneration, “I advised that a client should resign from her job”.
I thought for sure he was going to realise he was talking about himself after giving this “advice” to his client LOL
Jokes aside, this is actually quite interesting. A planner giving advice (in the capacity as a planner and being paid for those services) for their client to resign from their job. Should the client then come under financial pressure, is the planner legally exposed here? Personally, I think there is an argument that they are. Anyone?
I think it goes without saying that this advice (ie for the client to quit her job) could only be given if the client could afford to do this. It would be negligent to give this advice if the client couldn’t afford to.
However, you have missed the point Mr Neilson was making in that this type of advice (or lots of similar things we tell clients) doesn’t fit in the current rules and regulations. The current arrangements have been designed around the premise that all we do is take $ and direct it to investments. It raises the question of whether this type of advice by in an SOA and if so why (or if not, why not).
great concept but they have never listened to financial advisers so why would they now?