Financial planning licensees are taking very different approaches to enforcing FOFA’s best interests duty for their advisers, according to a software executive.
The application of the best interests duty to product recommendation by advisers is a wedge issue, splintering opinion among dealer groups as they seek to comply with the new codified requirement, Midwinter national head of distribution Peter Burns told delegates to the AFA conference on the Gold Coast this week.
“We are seeing quite a dramatic divergence of opinion on what is the right way to cement some of these best interests requirements, particularly when it comes to product,” Mr Burns said.“There are some dealer groups that mandate that every time an investment or insurance product is recommended, you must provide a minimum of two or three specific alternatives to that product, while other dealer groups are not taking that view at all.”This divergence of opinions among dealer group executives is subsequently posing challenges for product manufacturers, Mr Burns said, reflecting that software providers in particular will need to be able to adapt their product to the various best interests duty approaches taken by various licensees. “The tricky part is: what does the dealer group require and can the software provider handle that on your behalf?” he added.As a general rule, in order to ensure compliance with the best interests duty, advisers should “act as if they were advising their mother”, Mr Burns said – to which session moderator Mark Stephen of Lonsdale quipped “assuming you have a good relationship with your mother?”What approach is your licensee taking? Have your say below
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