According to Connect Financial Service Brokers chief executive Paul Tynan, the next generation of advisers will have the burden of education debt, over regulation, the tarnished reputation of financial services and an unfriendly business environment to contend with.
He said it’s just one of the many long-term consequences that the royal commission will have on the advice industry.
Mr Tynan also pointed out that the Canberra bubble and self-interest groups have completely hijacked the advice debate and the subsequent decisions have been made with no understanding about the effect this will have on consumers, their needs and affordability.
“Government, ASIC and the associations have been so consumed with conflicted remuneration they have failed to understand why commissions were developed to be paid out of product and why this concept came about globally within financial services,” Mr Tynan said.
“If the decision-makers were genuinely concerned about conflicted remuneration, they could have simply required every piece of advice to be in the best interest of the client and set level commission percentages.
Mr Tynan noted that the government’s re-election was seen as the rejection of Labor’s banning of franking credits for the retrospective nature of the proposed policy.
He then asked whether the government would apply the same principle and review grandfathered commissions on the same basis as it is also clearly based on the retrospective nature of changing product design.
“The commission in these products had no connection with the ongoing servicing of clients and was developed ‘in product’ because the consumer could not afford or would not pay for the advice,” Mr Tynan said.
As a result of these post-royal commission outcomes, Mr Tynan said Australia has entered into a new era of unaffordable advice – and it comes at a time where the majority of Baby Boomers will be entering into retirement with advice crucial for their financial wellbeing.
“To date, the debate around industry reform has been dominated by self-interest. It won’t be long before the extent of self-harm on the economy is realised and common sense will prevail,” he said.
“I am confident that once this realisation is made consumers will have access to affordable financial planning. Until then, expect pain for all.”
I’m calling for all active and employed Australian politicians to sit a mandatory ethics exam by 1st January 2021. They will have 18 months to plan for it. This is the precursor to a degree each politician would be mandated to complete by 30/06/2025. After this date it will be necessary to hold the degree in order to be registered as a minister in Politics in charge of a significant portfolio. A RELEVANT degree to each specific portfolio must be held for that minister to be assigned to it for the time which his party/government is in power. This will be adequate time to do the 100++ hours of study required for the ‘Australian Politicians’ degree, a degree designed to restore faith in the wider community in politicians after the onslaught of abuse certain ‘bad apple’ politicians have displayed with disregard for the Australian people over the last few decades. The new degree, to be ratified by a fully qualified panel of chosen individuals from many walks of life. would focus not only on Australian law but on ‘best interest’ duty and duty of care to the Australian public who elected them. We are, after all, talking about the management of our country, that of essential services and the best interests of the entire population. Far too much fraud and corruption has been demonstrated and proven in this ‘political’ industry for it NOT to be regulated properly from now forward. Who seconds the motion?
[quote=NextGen Adviser ]Interesting read. As an adviser for the last 5-6 years, I see nothing but opportunities in these changes in the long term. I understand some businesses are feeling the pinch more than others right now, but this is a great opportunity to sharpen your tools and show the public what an outstanding professional you really are. We are not the only industry to go through change. There are industries where exactly these sorts of major changes emptied out the yard. Can you imagine how successful the ones are that stayed true to their profession? These people are what we see as ideal clients now, as they are highly elite, successful professionals that need advice on what to do with all of their money from being in such demand![/quote][quote=NextGen Adviser ]Interesting read. As an adviser for the last 5-6 years, I see nothing but opportunities in these changes in the long term. I understand some businesses are feeling the pinch more than others right now, but this is a great opportunity to sharpen your tools and show the public what an outstanding professional you really are. We are not the only industry to go through change. There are industries where exactly these sorts of major changes emptied out the yard. Can you imagine how successful the ones are that stayed true to their profession? These people are what we see as ideal clients now, as they are highly elite, successful professionals that need advice on what to do with all of their money from being in such demand![/quote]
Do you feel like calling advisers in small towns and telling them how much better off they are going to be.
Interesting read. As an adviser for the last 5-6 years, I see nothing but opportunities in these changes in the long term. I understand some businesses are feeling the pinch more than others right now, but this is a great opportunity to sharpen your tools and show the public what an outstanding professional you really are. We are not the only industry to go through change. There are industries where exactly these sorts of major changes emptied out the yard. Can you imagine how successful the ones are that stayed true to their profession? These people are what we see as ideal clients now, as they are highly elite, successful professionals that need advice on what to do with all of their money from being in such demand!
I already have 30K on hecs debt, i am not doing any more study. Wish I was a tradie instead of this farce. biggest mistake of my life, 10+ years wasted on this industry.
Been saying this for ages. Heres a young person who has $50k to spend on a HECS debt and says, hmmm…Financial Planning or . They”d have to be nuts. Better off as an electrician.
I wonder if Mr Hayne refunded his clients when he lost a contested court case as a budding QC? Inappropriate advice?
Great article. The unintended negative consequences of Mr Hayne’s ideas of how the word should be managed, are immeasurable. Let’s hope the voice of reason eventually prevails.
Hi Paul – what will you personally gain out of the changes that you outline?
Congratulations to a toothless FPA and ineffective AFA for what will decimate our profession. An industry that is not united, and full of ego’s. Yes post Hayne some things will improve, but the cost to Australian consumers is there to see. Fewer advisers, and much much higher fees charged to serve, and less Australians having access to a profession that cares and helps peoples financial well being. But hey, who cares??
Why would anyone become an adviser , when liability of advice is for life, yet income is based on an opt in scheme developed by beauracrats who hide behind government backed super, and rules that are anti wealth accumulation.
Over regulated to Death by 1 million pieces of stupid red tape legislation.
Please Canberra Bubble morons pull your collective heads out of you Butts and check out the real world.
ASIC need to go back to it’s abandoned attempted mantra from 4 years ago for SoA’s to be clear, concise and short. So Advisers can read them and less time is wasted on massive compliance that benefits no one.
Stop over bloody complicating everything and stop legislating / regulating the economy / advice industry to death.
Surprise surprise these morons haven’t got a clue and less risk commission the biggest disgrace
Couldn’t be more well said !
The only way this could work is if the Government does a series of main-stream media campaigns to educate consumers about the impact of these changes:
> When people need to take financial advice, and WHY
> What the exact scope should be
[b]> A clear RRP for that scope advice[/b][b][/b] (recommended retail price or price range)
Trail incomes were partly there to take the pressure off up-front advice fees. Consumers need to be taught this fact. And shown what the new normal looks like. E.g. “Instead of paying $400 per year for your [i]fee for low service[/i][i][/i], you now pay $2,000 up front”.
Without change management support from those changing these policies, no talented professional would choose to be an adviser. Low income and you’re the scapegoat for everything and anything that goes wrong – sneered by the likes of AFCA.
No right minded person would consider entering this industry once they’ve had a proper look at it. It’s akin to banging your head against a brick wall where a new layer of bricks is seemingly added on a weekly basis
It’s simple yet unfortunate – young and lower-income earners won’t be able to receive or afford advice as they’re no longer cost-effective for Advisers to help; the underinsurance issue will blow-out; retirement savings will end up being inadequate as the majority of clients will be with underperforming Industry Funds instead of outperforming actively managed portfolios; and the centrelink and compensation budgets will blow-out massively and therefore national debt levels and unemployment. Great work Hayne! Next time perhaps instead of having a lawyer as the Commissioner, they should have someone who has more than a 5% understanding of subject matter to be discussed at a RC.
Agree
I was at a Careers Evening last week where there were 22 careers showcased and approximately 70 students from years 10 to 12. I had one enquiry about Financial Planning. The Account had no enquiries. The Small Business/Entrepreneur stand had only 3 enquiries. Careers of interest were Graphic Art, Information Technology and Landsacping. From this limited example it seems that the next generation do not seem to be interested in Accounting or Financial Planning and echoes concerns in the industry.
Well said the self interest is a disgrace and those suffering will be the advice community and the consumer, the realisation will come too late.
Paul don’t just write your views here, don’t trust the associations to get the point across, contact the minister direct