Speaking on a panel discussion organised by software provider Advice Intelligence, FPA head of policy and government Ben Marshan said the current challenges facing goals-based advice were driven in part “by the fact the licensing regime is the way the licensing regime is”.
Mr Marshan said the transition to goals-based advice is “not working at the moment” because licensees are “telling the planners what they can and can’t do and how they can or can’t do” it, but a shift to an individual licensing model can address this problem.
“If the financial planner is individually licensed, if the financial planner is individually responsible for what they’re doing and the advice they’re providing and the pressure goes from them up and says this is what I need, this is how I need to provide advice, these are the tools I need to provide advice, this is how I’m going to help my clients achieve their goals and objectives,” he said.
Mr Marshan added that the industry is already heading towards a shift in the way advisers are licensed.
“I think we’re getting to a tipping point where the ship is going to turn over and individual financial planners are going to take control of that, and certainly many of them are starting to do that,” he said.
Once again the industry is preoccupied with looking busy.
If advisers want to be self directed they can get their own license.
If advisers want assistance offered by a license then that is an option as well.
Still waiting for an explanation FPA as to why it took 12 months to address a client complaint?. Plus still no answer addressing the issue raised in the RC that due to Sam H’s prominent position he was able to influence the FPA
Dear Mr Marshan,
Firstly, I’d like to remind you of the significant payment we provided the FPA last financial year plus fee paying members. Financial Planning is nothing to do about helping people with their goals. Financial Planning is about shifting and distributing product and policies. Secondly claiming individual licensing goes against all our objectives in having control to shift and distribute those products and determine the future of financial advice in Australia. Given the significant revenue we pay you little puppet please stop and fall back in line.
regards CEO Commonwealth Financial Planning.
So if individual licensing is the go then why does the FPA get payments from Commonwealth Financial Planning
Interesting that the FPA would have a view on licensing.
Its a member funded organisation without any obligations or charter to its members – with an affiliation and agreement with CBus, where any Adviser Best Interest Duty actions to disturb the industry fund/associated group insurance are met with FPA audits.
Sounds conflicted to me.
THE SECTOR IS IN A MESS
[s]SECTOR[/s] INDUSTRY
FPA be careful what you wish for. Vertically integrated licencees are a problem I agree. However the structures and processes that non aligned dealers provide would be of benefit to most planners. There will be plenty of sole licencees out there that claim they know best, in some cases this will be true.
However there will be a large cohort of that think they know the best but in reality don’t and would benefit from support, especially compliance, business systems, PI etc that the collective can provide.
This way they can FOCUS their energy on their clients, doing the right thing and spending less time on other matters that are not directly related to making their clients lives better and NOT being directed to conflicted product by the dealer.
If we were all just a bunch of sole practitioners I fear the scatter gun results from ignorance or hubris will create at least as many problems as it solves.
PS I’m a planner not a dealer group rep.
This industry needs to wake up and stop falling into traps set by others and set its standards based on what consumers want and need, rather than wait for regulation to set standards…all the while complaining about – you guessed it – regulation! Clients want to know what risks and rewards are potentially available and what legislation they need to take into account. The only time an SoA is difficult or even lengthy is when you’re selling a product, in which case you need to defend your actions against all the (not unreasonable) potential claims of self-interest or conflicted interest. Just don’t sell stuff. Allow clients to choose AFTER you’ve informed them about risks/rewards/legislation etc (if they can’t make an informed decision they should do NOTHING!) and make your advice non-reliant on transactions occurring. Advice should be exactly that – offered and charged for whether accepted (or acted upon) or not. The reason we have all these issues is because of the sales culture that remains alive and well. If you’re going to sell anything, sell yourself. Act as clients’ advocate rather than product advocate.
Probably the best comment I’ve ever heard from a planner Phillip Carmen. IE “Advice should be exactly that – offered and charged for whether accepted (or acted upon) or not”. My thoughts exactly. Get rid of everything else. Upfronts, trails, fee for service rort, it is all a huge con and a rip off for the client.
There would be some small and very minor fee for service justified but very rare and only for those very needy complex high net worth clients that need it. The rest should be as described by you.
Man this industry is still full of salesmen selling nonsense, fools in suits.
That’s a horribly ill-informed comment.
Steven knowledge of the area extends to thinking an annual review takes 2 hours and should be charged at $200.
Some people can only see the negative in everything they view, even if that negative is the underwhelming minority. No good deed goes unpunished eh Steven . . . It could never be expected that people like you carrying an agenda would acknowledge the good that decent financial planners and risk specialists do for the community, no, that would never feature in a snide opportunistic comment of yours. I’m sorry that whatever wrong you have suffered continues to be, obviously, very raw for you but seriously you are polluting the gene pool here with your toxic talk relating to the job good job most advisers are doing for their precious and loyal clients. You’re in the minority Steven so just pipe down – we’re over you.
I also agree and have stated the same. Give advice, charge for advice..NEXT PLEASE. Let the product manufacturers set everything up according to your instruction to the client. Think of it like a doctor’s scrip. Does your doctor phone you up daily or monthly to see if you’re taking your meds?
We need to stop this “we will do everything” advice process. “Financial advisers”… my butt. Should be called “financial accept all risk and responsibility officer”.
Yes, let’s operate like doctors, great idea. The Government should force every Australian to get a prescription from a financial planner before they invest or insure themselves. FASEA should also regulate the number of university graduates so we can keep the supply-demand equation in our favour so we can charge huge fees, just like the medical colleges do. That sounds awesome. While they are at it, lets dump the free ombudsman service so it is difficult for our clients to sue us if we stuff up and scrap statements of advice so its our word against theirs. I’m loving this idea. You’re a genius Gerry!
Thankyou – Whilst we continue to recommend and implement product and charge fees from it, we’ll never rise into the ranks of credibility. That’s the fact of the matter. All your loyal product providers are set up and waiting for your client to opt-out so they can take over. Let them, i say. Make them do some work for their admin fees. Focus on advice, shrink your SOAs, reduce cost, see more people. That is the future of advice….and, please find attached my invoice. Next.
That can be your model, sure, but it sure as hell won’t be mine. Give my regards to Centrelink.
I understand your point Philip however if I’m reading it correctly an SoA should recommend a client insure their income for x amount with x features, Life & TPD for x amount and x features, invest their super into x (balanced, growth etc) with x features & fees no more than x amount but…then the client has to do the research and leg work to determine which insurance provider will be best for them and which super fund will be best for them?
That’s the model ASIC wants. Go to the accountant get advice, and buy the product from a large bank that will compensate clients when it goes broke. ASIC wants to rule out financial planners.