FOFA’s fee disclosure rules and other new requirements are not driven by anti-planner sentiment, but by underlying motives of political self-preservation, according to a former Gillard government aide.
Former Citibank chief economist Stephen Koukoulas, who advised former Prime Minister Julia Gillard on economic policy from 2010 to 2011, said regulation of the advice sector had less to do with perceptions of the advice industry and more to do with safeguarding voters.
“From a politician’s perspective, they don’t want to see people losing money through poor investment advice, because even when it is not their fault, governments are often blamed when people lose any money,” Mr Koukoulas said.
“So with the regulation of advice…it’s not about politicians being out to demonise the industry, it’s about a blanket policy that stops people getting hurt, that’s what they are thinking when it comes to regulation.”
More broadly, the economist said Australia was entering an environment advantageous to professional financial advisers.
“With an ageing population and a compulsory superannuation system, Australians are increasingly going to need some form of professional advice, even self-managed super funds need external advisers,” he said. “Increasingly you must have advice and someone managing your money.”
"Financial services has recovered nicely from the [global financial crisis] and the future looks good.
“We are entering a low interest rate environment, not only with this rate cut – I think that is going to continue for some time – which means people need to think about low-risk ways of maximising their returns and an adviser can help with that.”
Mr Koukoulas will be speaking at the upcoming Wraps, Platforms and Masterfunds conference. For more information please go to www.masterfundsconference.com.au
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