According to the Hayne royal commission implementation plan announced by the government on 19 August, legislation to be introduced before 30 June 2020 will aim to address a range of measures to improve consumer protections.
Speaking exclusively to ifa, the president of the Profession of Independent Financial Advisers, Daniel Brammall, said the government has a mandate and is “fearlessly implementing” everything commissioner Kenneth Hayne recommended.
“It’s sink or swim time,” Mr Brammall said to advisers.
No deducting advice fees from superannuation accounts
New legislation announced by Treasurer Josh Frydenberg will aim to address Recommendation 2.1 – Annual renewal and payment for financial advice, Recommendation 3.2 – No deducting advice fees from MySuper accounts and Recommendation 3.3 – Limitations on deducting advice fees from choice superannuation accounts.
Mr Brammall said the legislation will effectively make illegal current opt-in and fee disclosure statement (FDS) arrangements, saying the move is “in response to the royal commission’s dramatic coverage of the ‘fees for no service’ scandal”.
As a result, he said annual, in-advance opt-in fees will become the norm for advisers.
Disclosure of lack of independence
Legislation to be introduced by the government will also address Recommendation 2.2 – Disclosure of lack of independence of financial advisers.
“These reforms add to the complexity that is already facing advisers, burdened by the FASEA education requirements, the loss of legacy commissions that were supposed to be grandfathered,” Mr Brammall said. “Then there’s the looming membership of an as yet unapproved code monitoring body.”
In the meantime, Mr Brammall suggested advisers should think about their practice and how it deals with ongoing remuneration.
“Ask yourself what you need to change, if anything, to ensure that your client remains a client if they don’t front up at your next annual review meeting,” he said.
“Plus, look hard at your lead generation practices – if you are not set up with strong referral arrangements then what steps do you need to insert into your client acquisition process to ensure that the conversation around independence can be ticked off, succinctly and effectively.”
I cancelled my AFSL a few weeks ago, and… feel totally lighter without all the BS looking at everything i do and advise.
[b]Moving into Financial Coaching[/b][b][/b] and guess what, I can be Independent and i have essentially the whole of Finance open to me to advise my clients on…..
My decision to cancel my AFSL was the best thing i could have done, you are continuasly watching over your shoulder for litigious action even though you have done nothing wrong.
The WHOLE industry is a disgrace.
[b]Roll on Financial Coaching[/b][b][/b][u][/u][u][/u]
Gav, if clients pay via investment or direct-no change the way I see it, if by super then that is what they are addressing–way out–increase super drawings and they pay you direct problem solved and it should be easy if clients are engaged
Never worked in any country. So why is the Australian government following a flawed idea that hasn’t worked anywhere?
“Sink or Swim”?? … as in after being walked off the plank in the middle of the Pacific?
this doesn’t affect advisers anyway but more so the industry funds….
This is a massive/massive game changer for advisors. I think this will disrupt the industry 10 fold over what has gone before.
That could be me gone..my clients are all engaged or they are let go. But whats the point of becoming lawyers charging at 6 minute intervals. Clients will not feel free to just call up and use me as a sounding board whenever they have felt the need before. I dont want to run my practice focused on being paid for everything I do. I want to help people to live better lives …how do I do that focused on being paid so I can survive?
Isn’t this what we are already doing? As a result, he said annual, in-advance opt-in fees will become the norm for advisers.
Not adviser disruption, rather adviser bankruptcy and i fear worse. Thanks Ken, Scott and Josh, well done on destroying so much in so little time.
where there is smoke there is fire…
https://www.smsfadviser.com/news/16843-royal-commission-mulls-ban-on-advice-fees-from-super
when you hear murmurings then you just know its coming!!!!
Buckle up businesses will be worth 0.5 to 1 x revenue soon
advice is dead – no longer can an adviser actually give someone what they want or need for a price they should or are prepared to pay. The insane level of compliance means advice or even simple changes for someone already getting advice is just too costly to do. Ironically what it already appears to be doing is creating more conflicts than reducing them as Advisers will simply opt out of giving advice or helping with simple product related changes so as to avoid all the buearocracy. Is that what the consumer wants? no but a lawyer is making decisions claiming “this is in the consumers interests” but has never asked the consumer! I just can’t see much of an industry left once this is all said and done and really who would work in such a industry anyway…completely exposed to litigation and subject to a legal standard of proof that is just not commercially viable…best to think about another career