Speaking to ifa, Tony Dann, principal of NAB-aligned practice BW Advisers in Ballarat, said his business will introduce a “levy or surcharge” to cover the additional compliance burden awarded to advisers by the parliament as a result of its passage of Labor’s FOFA amendment disallowance motion.
“In the lead up to the FOFA changes I had direct ongoing costs of around $30,000 – essentially a three-day-a-week staff member – arranging the paperwork and compliance, mail outs etc. [and now] we are having to go back to that,” Mr Dann said.
“At each review we will present our new service agreement as we always do, with a separate section explaining in full what FOFA is, what we now have to do, the time involved, the cost involved [and] the duplication of what they already get.
“I’m confident if done correctly I won’t lose a client but they will know why their cost has risen.”
The Apogee authorised rep said he will be explaining the politics of the situation to clients – including the links between the labour movement and industry funds – and will therefore apportion blame for the rising fees to Senators Lambie, Muir and Madigan, whom he will name the levy after.
BW Advisers has an associated accounting practice in which new laws and regulations directly impact fees for service, Mr Dann explained, adding that this would serve as the blueprint for rolling out a similar price structure for the advice business.
“I see this as no different [from the accounting compliance levy],” he said.
F Goose – well done on your transparency and valued advice. I don’t assume anything of the sort. Plenty of good advisers out there and I know and have learned from lots of them.
I know the costs of FOFA to my business and don’t see a problem. Believe me when I say I’ve looked for the problems, because everyone is whinging so much about it, but I personally just don’t get it. Nothing here has enlightened me!
Anyway, you’re right about consumer action. Best thing for a client to do is shop around and find a suitable provider. Cheers to those that promote the benefits of the service and don’t just moan about the costs! And don’t ask Dazza!!!
Oh well done I will introduce levy as well
Thanks Susie, I didn’t know about your initiative, which brings up a great point. If advisers don’t get behind the various different ideas that are designed to improve everyone’s perceptions, it won’t work and nothing will change.
So for mine, please support the crowd funding, and then your time won’t be required. Support is via small or large pledges, but importantly spreading the word, and creating positive change.
#PerceptionCorrection
Susie, happy to have you on board if you are still keen to help create change.
Ben and Marcus you both assume that transparency and valued advice is a new concept.
We have being doing both for over 20 years as have many other practises.
You both seem to have no idea of the cost of the red tape involved in FOFA – have either of looked into that ? If you have learned that by shopping around you can find a better adviser why don’t you see that as a more effective solution than imposing red tape on everyone ?
[quote]ENOUGH! Time to put your money where your mouth is and create change!
[/quote]
A few months ago I launched The Good Plan Project [url]http://goodplanproject.com.au/[/url], to do exactly what you’re talking about.
On my “to do” list this week, is to pull the site down.
I naively thought that advisers would get behind this. They did in words, but didn’t in actions.
Part of that was around me not spending time promoting the site to advisers and the public. My mistake.
But it also required the advisers that did know about it, to get involved. That didn’t happen.
Melinda, while I applaud your initiative to make a positive change re the poor perception of advisers presently out there, I can’t help lamenting the fact that you are trying to do the job that the FPA, AFA, and all the other so-called industry representative bodies have abjectly failed to do.
I genuinely wish you good luck and I hope you are able to be a catalyst for that difference that our ‘leaders’ have so poorly delivered on.
I don’t blame the practice charging a fee but it is just money grabbing from the Client who already pays a whole heap of other fees. If you want to be in Business, that’s one of the costs of having a robust compliance and risk framework.
BBK Ben, I’m sure Marcus has taken a couple of units in a hospitality course to get that expert edge necessary to critique the entire temporary accomadation sector. It’s analogous to one bad night in a hotel and condemning everything from the Hilton to a night in a tent without experiencing either.
ENOUGH! Time to put your money where your mouth is and create change!
https://www.kickstarter.com/pr…
You mean the fully independent advisers who openly promote to their clients and the public that they have totally banned commissions from their business, but continue the option to receive commissions and then rebate them to the client?
If these people truly believed that receiving commissions represented conflicted advice, then they wouldn’t receive them in the first place and then give them back and then charge a fee. If receiving commissions represents conflict, then that adviser may well recommend a product that pays the highest commission amount possible as opposed to the most appropriate product, so they can then rebate a higher amount to the client in order to help offset their fees. In fact an adviser could potentially increase their fees for advice based on the knowledge that the client would be receiving a higher rebated commission.
That just doesn’t seem right Ben, does it?
Geez Craig, Marcus is talking about the consumer experience of seeking financial advice, not staying overnight at a Best Western.
Thanks for all the free business advice though. Outstanding examples of why you should pay for a professional, independent adviser!
Enjoy your day!
@Craig…I like it and the “other Ben’ is spot on.
The charitable tree hugger conspiracy theorists view is only credible or sustainable when someone else is paying the salaries and the expenses or you have so few clients it dosnt matter.
Good practices are at the forefront of technology, yet every change, alternative, new systems, training, all comes at a cost and compliance with FOFA is a extra cost regardless of how savvy you think you are with technology and streamlining and your apparent endowment of imagination.
Such laughable comments suggest the person making them is not responsible for handing over money for systems, new technology and training. I’m sure you can conduct your hip, virtual life on your IPhone for under $1000 but costs in the real world are slightly higher.
Of course Ben. Always the answer isn’t it? Just hike up the fees. No imagination involved at all. No exploration of alternative systems and processes to streamline your compliance administration. Pretty much sums up why people think the industry is on the nose. And why it’s stuck in the dark ages.
I can see you now Marcus…trolling the Adviser Ratings website every evening looking for those “conflicted” adviser profiles and ready to give them what for…just like a dissatisfied stay at a hotel when there wasn’t a chocolate on the pillow.
Why don’t you start your own adviser rating website….CrapAdviser
may have market appeal?
Such bitterness in some of the comments here! The only reasonable response for financial planners is to increase their fees in the face of higher costs, more paperwork and increased risks. For anyone to suggest otherwise is quite nave.
Hi Ben….your comments are noted.
Is it “Ben” from BBK by any chance ?
To Marcus Wigan….I can fully understand why you didn’t have a Financial Planner for 10 years and I reckon nearly all other respondents can can too!
Perhaps you, John Ives and Ben could go into business together?
In my experience, those that argue against FOFA and it’s reforms, favour the lack of transparency that commissions and conflicted remuneration provide. It allows them a bigger income, for a longer period of time for doing less work – or “red tape” as some of you like to call it.
As Marcus Wigan says, consumers are onto the scam, and starting to ask the hard questions of the industry, and the vertically integrated sales nonsense passed off as advice.
If an adviser is any good, they will be able to disclose fees upfront, and regardless of products used, and offer a valuable service to a client in need. If they need to blame politicians for the cost, they probably need to rethink their career choice.
relevant reply to the anonymous funky goose
I was put off using Financial Advisers for a decade by an encounter with tied advisor to NAB.. undisclosed.. I was lucky, I found a more transparent, competent and honest advisor.(after a string of other clearly conflicted adviser checkouts). and pay him a significant monthly fee- he earns it.
This prior Nab adviser did not.
I also did the first part of a Financial planning diploma to be an informed selector of advisers and user of advice. I paid for that too.
I AM innocent enough to know that FOFA was about trying to correct the (well earned) appalling reputation that financial planning had generated. The CBA ‘response’ to the socking disclosures has hardly helped that!
Yes the act is a mess, so fix it, communicate and accept that the industry has a huge trust deficit to correct.
Other business’s be it legal, accounting, builders, plumbers, electricians pass on increases in costs when the need arises and the ability exists. Financial advice is not a free community service. This is no different in terms of practice or business model. If your so meek that you’re willing to absorb an ever increasing level of compliance cost or scared of being upfront and transparent you have issues. The alternative is to pass it on without notice perhaps?? Seriously who is naive enough to think FOFA was about restoration of image of the advice industry?
No wonder the public view of the advice industry is on the nose with stunts like this. Get over yourself and rethink your practice or business model. There’s technology out there that can drag you into the 21st century for starters. These measures are as much about improving the image of the industry as they are about protecting vulnerable investors.
just reading how commission on real estate purchases hasbeen deregulated in qld to match other states. Agent has NO cap and no requirement to disclose to purchaser what rate is. Just wondering whether there is more money paid/lost by consumers in property transactions or financial advice fees????? Apparently the move was made to AID competition.
Marc Wigan, Oscar Wilde defined a cynic as someone who sees the price of everything and the value of nothing. If you don’t want to pay for advice and service join the rest of the cynics but don’t expect to receive service or quality of advice. The argument that because 80% of the population do not have an adviser we need more regulation is forgetting a harsh truth – advisers have no interest in dealing with the cynics who want everything for nothing.
Do they get a copy of his manifesto and a how to vote card as well? I wonder how many clients will seek alternatives to this apparent profiteering.
Newflash @ John Ives.
Timbercorp was a financial product failure – NOT a financial advice failure.
Whilst people, including those in our own profession, cannot distinguish between the two – no wonder of pollies have no idea.
Just because we are at the coal-face of the client-product transaction does not mean we should be held totally accountable when products fail. How about the company directors of these failed businesses taking some of the blame??
Do you seek restitution from the salesman when a product fails or from the store/manufacturer??
Wake up!!
Put yourself in your clients’ shoes. Do you think they give a rats about your cost of doing business?
How many $ are you going to lose in time, explaining it to each of your clients?
Might be time to start thinking about value-based pricing.
Give the 1% of GDP already swallowed up by financial industry fees(one of the reasons for FOFA of course, apart from other well known market failure factors) this is a predictable response to (try to) continue to secure economic rents…. it will be fascinating to see what happens if he does act as above. I hope he reports the results here soon..
[quote name=”John Ives”]What a joke get over it if it wasn’t for all the poor advice provided to clients over the years we wouldn’t have got into this mess.
Maybe call your levy “Storm of Timbercorp as they are some of the ones who the Government responded to.
Or even maybe ASIC as they are the ones who dropped the ball in compliance follow up.
Lets not get to carried away with what is needed if you have good systems in your business the extra workload shouldn’t be that much.[/quote]
The reason given for Muir’s switch was a heartbreaking story relating to a timbercorp client.
Truth be told the client was trying to dodge a big tax bill and an UNLICENCED ACCOUNTANT provided the suspect advice.
He’s still doing tax and has no increase in compliance costs.
Another union scam and Lambie, Muir et al aren’t smart enough to see it.
God help this country as our elected officials won’t.
Ah! Pavel, always reliable in missing the point completely or not reading the article or both. It is about duplication that is the point. Derrr!! How dopey!!!
Genius idea. Publish the costs summary and rationale and we’ll all use it.
I would love to see his breakdown of numbers.
Brilliant the AFA and FPA could learn something here
How dopey. If the cost of providing the disclosure you should have been doing anyway is cost prohibitive to your business, get out and allow more efficiently run and better structured advice businesses thrive.
The most effective way for the self employed advice profession to combat the hypocrisy of the Labor parties biased support for the industry super funds is to target members as their super funds grow. It is a short sighted strategy to attack advisers. There is also ample ammunition and motivation to remind friends/family of the true colours of the Labor party when election time comes around. They have clearly demonstrated their commitment to their union mates rather than promote jobs in a service industry that should be flourishing rather than being held back by red tape and uncertainty.
I whole heartedly agree with Tony Dann’s comments. The implementation of FOFA has put additional costs unto practices which unfortunately will result in rising costs to the consumers, affecting these who need advice most and can least afford it.
Like other practices, we will be explaining to our clients the politics behind the changes and the links between the industry funds and the labour movement.
Being an adviser is about looking after your clients’ interests. The way FOFA has been introduced adds to the red tape but nothing to benefit the clients.
[quote name=”John Ives”]What a joke get over it if it wasn’t for all the poor advice provided to clients over the years we wouldn’t have got into this mess.
Maybe call your levy “Storm of Timbercorp as they are some of the ones who the Government responded to.
Or even maybe ASIC as they are the ones who dropped the ball in compliance follow up.
Lets not get to carried away with what is needed if you have good systems in your business the extra workload shouldn’t be that much.[/quote]
John, glad you have found your way out of the cave after all of these years, unfortunatly you have a bit of catching up to do!
What a joke get over it if it wasn’t for all the poor advice provided to clients over the years we wouldn’t have got into this mess.
Maybe call your levy “Storm of Timbercorp as they are some of the ones who the Government responded to.
Or even maybe ASIC as they are the ones who dropped the ball in compliance follow up.
Lets not get to carried away with what is needed if you have good systems in your business the extra workload shouldn’t be that much.
yep, awesome idea.
Observer 101 – Yes, all small business owners do face additional costs and they all have to look at increasing revenue to cover them. If the cost of the service goes up then the cost of the service to the consumer will have to go up.
How don’t you get that ?? How doesn’t the labour gov, Muir, Lambie et al, get that ??
This is Gold.
@ Observer101 – How is this in any way a “low act”. Sorry, I just don’t see your logic.
What a great idea. Transparent and the client gets to realise you get nothing for free…even consumer protection..such that it is
bloody brillant.
I understand the sentiment and don’t have any problem with it, as it is the reality of what we are up against. However the independent senators are only backing up what the Labour Government have put in place, so it should be the Labour Government, Lambie, Muir, Madigan Levy.
And we ask why people think lowly of the FP profession at the moment? All small businesses owners face additional costs…..