Speaking to ifa, president of the Independent Financial Advisers Association of Australia (IFAAA) Daniel Brammall said, following ASIC’s recent crackdown on the non-aligned sector, he had received an increased number of enquiries from advisers wanting to know more about becoming independent as defined under the Corporations Act.
“I’ve received enquiries from people who have been sitting on the fence for a while, who have been calling themselves ‘independently-owned’ and now they can’t,” Mr Brammall said.
“The people I’m talking to largely practice as independents already, but they can’t call themselves independent because their dealer still allows some sort of incentive with commissions.”
Mr Brammall welcomed ASIC’s crackdown saying it forces non-aligned advisers to draw a line in the sand.
“Either comply with s923a and call yourself independent or abandon the idea of independence and stop calling themselves that,” Mr Brammall said.
In regard to going self-licensed, Mr Brammall said some advisers have claimed they are being blocked with 12-month waiting periods.
SMART Compliance director Brett Walker said in some cases it is more like a four to six-month wait.
Look, while I am independent there are simply bigger issues for ASIC to focus on.
Lets start with the email I just received offering me a free ‘personal wealth planning session’ where I will meet with a consultant for them to develop my personalised wealth plan to achieve $8,000,000 through property. They will even source the properties for me (not disclosing that they will receive 30k+ commission for each one they flog to me).
This mob doesn’t have an AFSL obviously and it just disgusts me they can openly say they want to provide unlicensed advice to push $8,000,000 worth of an illiquid, geared asset class to someone without any BID and get away with it. Meanwhile were getting grilled over whether we can be called aligned, unaligned or independent.
This is the ASIC agenda. Make it so hard to get good quality licensed advice at a reasonable price that consumers are pushed into the clutches of dodgy unlicensed operators that fall outside of ASIC’s responsibility. That way they don’t get the blame when things go wrong.
Property spruikers? Junk insurance? Roboadvice? Dodgy accountants? Not ASIC’s problem.
I don’t support the AIOFP cause – independent means independent. Receiving a commission is not independent as it is a direct relationship with a supplier for monetary gain. It is however absurd that ASIC are wasting their time with this (no less absurd though than the petty squabbling that is rife in this industry between the many factions and self-interest groups. It makes us all look bad.)
No-one that is part of any large licensee (whoever owns it) is independent, they are governed by that groups ideals, ethics, and ways of doing business etc.
Independent is on your own. Independent of anyone and not receiving any payment from anyone, especially commission.
Yep, independent means independent. But independent does not necessarily mean ethical. Nor does independent necessarily mean in the client’s best interest.
And independent definitely doesn’t mean “conflict free”, contrary to the claims of the IFAAA.
It’s all well and good to be on your high horse Daniel, but what about clients who are happy that their adviser gets paid a commission because it means that they don’t have to pay for it by writing a cheque from their own bank account? Shouldnt this be all about how the client wants to pay for the services they receive?
When FDS’s and Opt-in first came in I had a client who was in a bundled BT Wrap product for investment and a non-bundled BT Wrap product for super. He called after receiving the notice and queried why he got this, and why werent we just getting paid from the fund? Despite explaining that the overall ‘cost’ to him was the same in the bundled or non-bundled product, he was adamant that he only wanted us to get paid by the fund manager, not from his account. He opted out of paying a disclosed fee on the super account, but was more than happy for us to take comms on the investment account and on his insurance.
Come 1st January 2018 when comms from all insurers align at the same rate, there can no longer be the assertion that a particular insurer has been selected based on the level of their commission structure. We’ve used hybrid comms almost exclusively for years so I see no issue with the current changes, just the clawback if the client cancels within 12 & 24 months. The other common statement against insurance comms is that advisers recommend more cover than the client needs. But more insurance decided by whom? It is well known that there is a massive underinsurance issue in Oz. Just because a client currently has 2 units in cover with Aust Super for $104,000 but has debt of $600K, and a couple of dependent children doesnt make the need for more cover any less valid. I would even venture that it is UNprofessional of any adviser to not adequately recommend the most appropriate level of cover that a client needs. Let them tell you that they cant afford it. Better to reduce the sums insured at the clients instruction than to just low ball it because you are concerned about costs or worried about being painted as conflicted because you take commission. The clients will be the big winner in the event of a claim, not you as the adviser for putting the policy in place.