ASIC chairman Greg Medcraft has flagged a "misalignment of interests" between financial advisers who charge asset-based fees and clients who are entering retirement.
Speaking at the Centre for International Finance and Regulation symposium in Sydney yesterday, Mr Medcraft appeared to endorse elements of a paper presented by Macquarie University academic Professor Geoff Kingston titled Regulation of Financial plans and Allocated Pensions.
“[Mr Kingston’s] research [that shows] the misalignment of interests for financial advisers who charge asset-based with risk-profiled clients nearing retirement or early stages of retirement I think is very interesting,” said Mr Medcraft.
The ASIC chairman also took the opportunity to reiterate his concerns with the financial advice sector.
“In terms of conduct regulation, clearly these are issues being considered by David Murray’s [Financial System Inquiry] – in particular the role of financial advisers,” said Mr Medcraft.
“At ASIC we regard financial advice as a very high-risk sector and one that is an ongoing focus,” he said.
Asset-based fees have been a contentious topic in the wake of FOFA, with Financial Service Council chief executive John Brogden labelling Industry Super Australia’s attempts to conflate them with commissions as a “furphy” earlier in the year.
“Here's the difference: they go up and down if your assets go down – and a lot of people's assets went down in recent times. It's a furphy to suggest that commissions continue with asset-based fees – they don't,” said Mr Brogden at the time.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 18 Jan 2019Advisers to suffer ‘horrendously’ from FASEABy Sarah Simpkins
- 18 Jan 2019Praemium FUA up 14%, reveals platform upgradeBy Adrian Flores
- 17 Jan 2019ASIC takes court action against former adviserBy Adrian Flores
- 16 Jan 2019NAB FP seeks resolution of false witness investigationBy Adrian Flores
- 16 Jan 2019High demand for advisers and paraplanners in 2019By Adrian Flores
- 16 Jan 2019Foreign adviser qualification standards finalisedBy Adrian Flores
- view all