Share market analyst and advice service The Motley Fool has penned an open letter to the prime minister arguing the intended repeal of parts of FOFA is not in the public interest.
Reflecting on the Coalition’s pre-election commitment to wind back aspects of the FOFA reforms – such as opt-in and fee disclosure requirements – Motley Fool investment adviser Scott Phillips wrote to the prime minister warning against conflicted remuneration in the industry.
“Dear Prime Minister, individual Australian investors deserve to receive conflict-free advice from financial advisors, and to be protected from overt or subliminal incentives that might lead those advisors to provide advice that is anything less than completely client-focussed,” Mr Phillips wrote.
“There are too many stories of clients being erroneously pushed into products that are unsuitable for them -- and an unconscionably high proportion of those products carried enormous commissions for the planner or the planner’s dealer group.”
Mr Phillips also argued against the ability for vertically integrated businesses to promote products through their adviser distribution and dealer group channels.
“Mr Abbott, I understand why some in the industry are lobbying you and Senator Sinodinos for changes. They like the current system with its gravy trains of fees and commissions,” he wrote.
“The Motley Fool doesn’t have a beef with financial planners at large – they provide a worthwhile and necessary service. Nor are we opposed to them making a living – if they provide worthwhile advice, they should be compensated appropriately, even handsomely if their advice results in great outcomes for their clients.
“But such compensation should come only from the clients themselves – never from vested interests, no matter how innocent or unintended the consequences from either party.”
The equities adviser said that reforms limiting the control of political lobbyists over the Liberal Party should be mirrored in the financial services industry.
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