In its submission to the parliamentary joint committee inquiry into adviser standards, ASIC said it still believes a number of “significant changes” are required before the “transaction-based sales force” that is the advice industry becomes a fully-fledged profession.
“While there are people working in the financial advice industry who are professionals, the financial advice industry as a whole is not currently a profession,” the submission states.
ASIC lays blame for this lack of progress towards professionalism on the fact that the industry is “not homogenous”, with a diverse number of occupations represented under the broad advice banner, listing “financial planners, accountants and stockbrokers”.
The submission especially singles out the role played by having a diverse range of “separate industry associations”, which it says causes complications for a range of stakeholders.
“In our view, the proliferation of industry associations is an impediment to the professionalisation of the advice industry, as fragmented representation is inconsistent with a common identity,” ASIC says.
In addition, the submission contends that “competition among industry bodies for members in the financial advice industry” creates a disincentive for them to place sufficient levies on their membership required to conduct rigorous compliance investigations.
In other words, ASIC has accused the associations – by way of competing with each other – of hindering the goal of professionalism, rather than helping it.
The submission also said that enduring conflicts of interest not within the scope of FOFA – such as grandfathered conflicted payments – are also impeding the move to professionalism.
ASIC’s comments to the parliament come despite FPA chief executive Mark Rantall telling ifa in August that the FPA would be shifting focus from professionalism to the public interest, given that the end of “evolving financial planning into a universally respected profession” has now been met.
@Steve – Ahh Steve, if I was not holding my clients hand, their mistakes would be costing them way more than 5k per year.
Unfortunately its the ‘ill informed’ who make the greatest number and biggest mistakes.
So Steve you are the moral voice for all pensioners are you ? What entitles you to that role ? Have you studied behavioral finance ? It may give you some insight to value of the hand holding you are scornful of. Not to mention the role advisers play in helping pensioners plan for their cash flow needs and reviewing their investments,navigate age pension and tax legislation as it evolves (eg changes on 1/1/15) estate planning and navigating the aged care facility options and home help. Ongoing care and service Steve. Might be a new concept to you but it is not a new concept to the pensioners. Go and ask them !
Once again ASIC has shown its irrelevance, incompetence and ignorance. While desperately trying to be seen as a friend of ‘Choice’ neither of whom are truly consumer advocates.
Philip, while there are still some ‘product floggers’ out there. From my time Ive seen the industry evolving ‘very quickly’ in the last few years. (Even though it’s been off a very low base) Whilst I respect your comments and agree with you on the FPA, ASIC simply don’t have a clue (Re: Roderic’s comments below) – so I think no one buys the second half of your comments. I would suggest it blatantly wrong that ASIC is passing on comments about how fragmented and un-homogenous our associations are. Ive heard clients complain about losing money from poor investment advice, I have certainly not ever heard them complain about how many separate industry associations we have. That my friend is just complete rubbish.
Professionalism takes time and careful planning.
Well said Phillip Carmen. Spot on. The FPA disgust me & their two faced rubbish they bang on with. All they are interested in is self preservation, flogging courses at every chance.
Advisers will NEVER be seen as a profession unless they stop this rampant sales flogging of outrageous fee for service charges where not needed & product flogging. Advisers…..If your practice can’t survive without stinging pensioners $2k to $5k pa for basic hand holding then LEAVE thus industry & go sell something else. It’s no longer about you and what your practice can make by hoodwinking the ill informed. Get out.
Mark Rantall must be living in fantasy land. The FPA has been much of the problem over many years – rejecting the simple truth about commissions and conflicts of interest until it couldn’t any longer – and then back-flipping neatly and claiming to be completely on board. The FPA will never be trusted again and until all advisers separate themselves from transaction based remuneration they’ll not be seen as “advisers” but as selling product. It’s not rocket science. ASIC is right and is simply passing on the message from the public and the other professions who have run out of patience with this industry’s refusal to cope with the facts of life. Those of us who have the correct distance between ourselves and conflicted interests (and product) are being hampered by those who won’t accept reality. Some of us who have been doing it properly for 25 years or more and are tired of waiting for those who prefer to keep their heads in the sand. I washed my hands of you years ago.
In our view, the proliferation of industry associations is an impediment to the professionalisation of the advice industry, as fragmented representation is inconsistent with a common identity, ASIC says
To quote that worldly-wise philosopher, Joey … “How you doing?”:
1. CPA Australia
2. The Institute of Chartered Accountants in Australia
3. The Association of Taxation and Management Accountants
4. Institute of Public Accountants
5. National Tax and Accountants’ Association
What a load of rubbish! Yes there are some issues with different associations representing different advisory categories. But much of the problem lays squarely at the ASICs feet for years of selective regulation, continuously beating small groups, while being soft on larger groups. For example based on the publicly available information it appears the CBA, systematically set out to flog products for excessive commissions and not act in the clients best interests, apparently also being economic with the truth to ASIC and the parliamentary inquiry on it’s compensation of clients. What AISC penalties, enforceable undertakings! If the ASIC is serious, please explain Mr Kell why the ASIC hasn’t suspended the CBA licence? Doing that would clearly send the message to the sector the ASIC is serious and professional standards are to be taken seriously. Until senior management in organisations such as CBA are prosecuted, bringing professionalism to the whole sector is going to be very hard!
interesting article, it would be great if the AFA & fPA would merge, at least the 2 peak bodies would be united
Interesting….”transaction based salesforce”….like Lawyers! Yet they are perceived as a profession.
Associations competing…now we are getting some truth. FPA delusional again.
There are too many snouts in the trough and a poor regulator who wont take on the hard end of town to remove the conflicts. Advisers – all the risk and little of the upside whilst product providers take no risk and high profit. Who are targeted? Advisers. Most of whom are professional in behaviour with clients which is the ultimate test.