Consulting and research house Mercer has proposed a model for government-subsidised financial advice, arguing the precedent is already set with tax deductibility of other professional services.
In its second submission to the Financial System Inquiry, Mercer proposed a tax-deductibility model focused on the initial client-adviser meetings in order to help raise the number in long-term advice relationships.
“The government should allow the preparation of an initial financial plan that is normally charged on a fee for service basis to be tax deductible,” the submission said.
Tax concessional treatment of expenditure is an "incentive to influence consumer behaviour", it added.
“The educational value for consumers by the provision of advice is well documented and demonstrates that access to affordable financial advice is a critical element of Australia’s economics environment,” the submission states.
“However, the cost of delivering advice is high due to the strict regulatory regime, limiting the ability of many to access affordable advice, particularly those [with] lower incomes.”
Mercer’s submission also said the lack of clear differentiation between financial advisers, product advisers and providers of general advice confuses and “misleads” consumers in terms of services offered and standards of professionalism.
“General advice should be re-termed ‘product information’ and be limited to the provision of factual information relating to financial products,” the submission said.
“It should not be termed sales as this may make consumers reluctant to seek product information,” it said.
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