This morning, the assistant treasurer, Arthur Sinodinos, issued a statement announcing the changes to the FOFA legislation he will put to the parliament, including the removal of opt-in and changes to fee disclosure and grandfathering provisions, as promised pre-election.
A number of industry stakeholders have issued statements welcoming the announcement.
The Financial Planning Association said the announcement is a “sensible outcome for the financial planning industry and consumers alike” and is in line with the industry’s march towards becoming a “distinct and respected profession”.
“As our members and the wider industry will know, the FPA has long championed changes to ease the cost and red-tape burden imposed by FOFA on financial planners,” said FPA chief executive Mark Rantall.
Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston similarly welcomed the announcement.
“What a lovely Christmas present,” Mr Johnston told ifa. “At last a government and minister that has taken a pragmatic common sense approach to FOFA.”
The Association of Financial Advisers also welcomed the announcement. “These sensible amendments from the Coalition eliminate unnecessary red tape and costs and will help thousands more Australians receive the benefits of life-changing financial advice backed by the safety net of strong regulation that enforces client best interests,” said AFA CEO Brad Fox.
However, Industry Super Australia – formerly the ISN – wasted no time issuing a statement voicing its displeasure at the announcement.
“Industry Super Australia is today urging the federal government to defer a proposed change of laws designed to protect consumers from conflicted financial advice,” the statement said.
ISA chief David Whiteley urged the government to stick to the “sensible centre” and include the proposed FOFA changes in the scope of the Murray Inquiry.
The previous Labor government made a “number of concessions…to the banks and financial planners”, Mr Whiteley said.
Senator Sinodinos will be expanding on the FOFA changes as well as the Murray Inquiry at an upcoming business lunch in Sydney, sponsored by ifa. To reserve your table or seat click here.
Relying on a change of gov to affect improvements is liking “hoping” not get pregnant! Regardless of gov this industry is responsible for its own actions. “what if”? next election the other side is back! Disregard gov, work with what is!
[b]Concerned Consumer[/b]
We have been fee for service for over a decade, direct debt from the bank, not a product.
“I did not claim to be knowledgeable about this matter despite your accusations. I am an unsophisticated investor” was your comment.
Yes are free to express an opinion but only when you are informed. What does
FOFA mean? How does it add value for the client? Will it stop storm/trio/westpoint?
The answer is:
a) lots of red tape, driving up the cost of advice
b) It doesn’t at all?
c) Not at all, Storm was audited by ASIC and found to be 100% compliant!! Despite the fact the advice was woefully inappropriate.
So, in expressing an opinion, all comments are welcome but they must be balanced and based on well informed facts and knowledge.
Reactionary, ill informed, clearly self interested and self serving comments by Whiteley and the unions should get the attention they deserve…nothing.
I’m with Glen
It never ceases to amaze me how everybody knows what’s best for financial advisers and our clients except finacial advisers. We are are thanks to Mr Whitely, all assumed to be money hungry crooks lurking in the shadows just waiting to ripp off unsuspecting investors.
Thankfully our clients know better.
Concerned Consumer,
My responses are not contradictory at all. I am not sure if you understand the difference between “most” and “all”.
If someone came to me & all they wanted was general advice/information on, for example, Superannuation contribution rules, yes I would charge for my time. They could research it by reading the appropriate areas of legislation. However, if they don’t want to waste several hours doing so and instead want the answer in 15-30 minutes then why shouldn’t I charge them? It is likely going to be better value paying a relatively small fee then spending a lot of time reading a lot of information and possibly confusing themselves.
Don’t get me started on the rip-offs within the industry you work in. The number of unsolicited emails and phone calls I get from web designers is ridiculous and never once have I been offered “free” advice. Maybe you should work on improving your own industry before telling us how to improve ours.
Glen,
In your contradictory response you have successfully shown why opt-in should be retained in FOFA.
To highlight your contradiction, in 1), you know people don’t need/want generic advice but, in 3), see no issue with charging subscribers for it all the same. To me, this is simply unethical and indicative of the opinion of many FA’s that, every thought they have and every word they utter is worth money. Ask the Storm and LM victims if they concur with you. Lose the over-inflated self opinion and do some value added work.
As a web developer with several hundred licensed users of our OEM products, we regularly provide free consultation (possible solutions to problems) to clients and non-clients and see this as a brand building exercise. Our clients see this as valuable service and resultingly refer a lot of business to us believing us to be genuinely interested to see they don’t waste time or money. Most industries other than the financial sector act similarly.
Concerned Consumer,
1) the way a person would “know better” is to actually sit down with a Financial Adviser and discuss these issues rather than assuming every Adviser is simply out to unnecessarily charge for generic advice. Most people don’t want, or need, generic advice they want/need advice specific to their situation.
2) I have not accepted a commission, or percentage based fee, for many years. I charge my clients on either a hourly basis or an agreed retainer basis. Every client has it explained to them upfront and during reviews that they are free to leave at anytime if my service does not meet their expectations and the fees they pay will immediately cease.
3) For providing generic advice I would charge for my time. No different to you turning up to work and being paid to do your job. Why do you feel that Advisers should not be paid for the advice they provide? Even generic advice can sometimes improve someone’s financial position.
Ben, Glen, PB,
1. Nice to know I’m “Simply wrong” and only your opinion can be correct. You sound more socialist than the socialists you collectively seem so opposed to in other comments here. Me? I’m balanced. I despise both sides of politics equally for their collusion and UN allegiance and non-represenation of the people. The UN dictates, Labor spends to create debt, Liberal sells off publicly owned assets to repay it. Its been a cycle for over 50 years. Consider that in the next advice you offer.
2. I’m not “David Whiteley in disguise” as Glen inquired, however if a figure such as Whiteley is unaware that ‘clients’ can opt out as simply as you suggest, then how would a semi-literate factory worker with English as a 2nd language know better? Do you all provide a notice to this effect on all generic correspondence you send out to ‘clients’?
Ben, Glen, PB,
I did not claim to be knowledgeable about this matter despite your accusations. I am an unsophisticated investor with an opinion that I wished to express. Nice to see how greedy advisors really think about this issue and how they consider their less informed clients behind their backs though. A real eye opener, it’s been.
You guys must be too scared to stand on the merits of your own good work. You’re much happier getting money from ‘real’ workers, and providing effectively nothing. To some, that might be considered fraudulent. It also maybe unjust enrichment. What is the typical fee p.a. for this sort of tip-rat generic advice anyway? 100’s of $$ per ‘client’, no doubt.
Concerned Customer your choice is simple. Move your super to an industry fund. Then you can experience the wonderful service and advice that the ISN offer.
For a fee of course, which you will no doubt be delighted to pay.
Your concerns will all be over!
The ISA/ISN, like the ALP/Greens coalition won’t accept that they lost the last election.
The adults are back in charge – get out of the way!
Is “Concerned Consumer” really a consumer or is it David Whiteley in disguise? The lack of knowledge of how the industry works, in terms of the ability of clients to cancel the fees/commissions they pay at anytime sounds a lot like Mr Whiteley.
Also, most of the time it is the unsophisticated investors that need advice the most. If more of the “unsophisticated investors” took advice from an early age, rather than blindly assuming that the default option is the best one for them, we wouldn’t have the massive reliance we do on the Age Pension.
Good advice will always give a better outcome then simply savings a few points on the Management Fees paid. This is something that the ISA/ISN have never been able to understand, probably due to the poor level of advice they provide to members.
Concerned customer – you are simply wrong! Our clients can turn off our ongoing fees whenever they like. It just takes a phone call or a letter. That has always been the case. Unlike Julia Gillard and Bill Shorten, our clients don’t have to wait 3-4 years to sack us if they are not happy with our performance. Fortunately the vast majority of financial planners deliver outstanding service, which is repeatedly supported by customer satisfaction surveys which have been reported by IFA and other similar publications. Merry Christmas everyone!
Let the free markets determine how advisers should get paid and how much. Plenty of competition out there. People need to start checking qualifications and experience of the adviser and stop relying on government red tape to replace common sense. “What a lovely FSG …you must be a great adviser”. Finance is business…business equals big banks and products. Low cost efficient advice may be once again just around the corner.
I think every reporter writing pro ISA reports should have to hold ther super in a ISA super account. That would be a great lesson for them. they could try to move the money outand face the endless list of reasond why the money cant move, they should have to make an insurance claim to see how you are no longer an investor so there is no need to benefit you.
There is a Santa and there is a God!
Thankfully these Labor people are out of power…non-business people should never run our country.
David Whitely and Industry super funds?? they equal union movements – what a joke.
Shorten will not be in opposition for long…before the next election he will be stabbed in the back by one of his own…just like Rudd and Gilard…i have no fear that these changes are here to stay.
Well done Sinodinos!
I wish to support the position of Mr Whiteley as the opt-in requirements are a sensible provision for unsophisiticated investors to ensure they are not being unnecessarily charged for generic information being provided which was not tailored to their own requirements.
Advisors who believe they deserve renumeration for blanket type advice should consider that the provision of this advice should be just a cost of doing business and a way to differentiate their brand for it to be seen as a useful information source; not a way of generating revenue when the recipient consumer actually benefits very little if at all from the generic advice offered.
Consumers should not be direct debited on a perpetual basis when no real value is realised. Opt-in provisions mean Consumers can determine whether they wish to continue to deal with advisors based on performance, not glib generic opinion
Thank you
what a surprise? ISA not getting what they want so bleat.
Well done Arthur Sinodinos!
Lets hope the Senate manage to see commonsense too.
If I was the ISN I would be more worried about the upcoming commission into Union Rorts
A few ISN Trustees will be brought to account !
It doesn’t surprise me one bit that ISA is voicing displeasure. Being a representative of product manufacturers it would be remiss of them not to jump up and down at any threat to the product sales of the industry funds they represent.
I can’t see any real threat to their desire to provide (inadequate) general and scaled advice to members though. The way I read it, the proposed legislation will make it easy for product manufacturers (not just industry funds) to flog their own products directly to members and policy holders
But I may just be a born cynic!
Super funds provide the most conflicted advice of all, and how many industry fund advisers recommended Basis Capital Mr Whitely? FOFA was supposed to be about preventing the next storm & west point, but it morphed into a leg up for Labor’s industry fund mates. An insult to all the victims.
So true Edward
At least this time though, we’ll know what to expect.
Nice one PB, you hit the nail on the head!
The sad thing is that we are all delaying the inevitable here because as soon as Bill “short man syndrome” Shorten comes into power in the next labor-won election the first thing he will change is FOFA again and we will all be back to square 1.
David. It is high time you and your tribe were brought to heel and given a reality check. We now have an adult government in power, not one which is being lead around by the nose by the union movement and the ISA. The changes proposed finally get back to a more business like approach to running the country and are not driven by your leftist ideologies. May be if your members actually spoke to clients then you would realise most see the changes as just another level of costly regulations. There is a Santa afterall.
That’s a surprise that the industry funds are not happy, At last some common sense coming back into FOFA. i am a strong supporter of raising the bar, but a lot of FOFA is red tape which i am not sure how it improves the profession and the advice to clients
To Mr Whitley, I think the only concessions that the previous Labour Government made was to the Industry Super funds???
Lets hope there is a more level playing field going forward!
Sorry David
Your mate Bill is in opposition now. You might have to wait a few years to have the run you have enjoyed over the past six years.
Hopefully I will be long retired.