Last week, Treasurer Josh Frydenberg introduced draft legislation that changes existing laws for ongoing adviser fees as well as require financial planners to warn clients if they don’t meet the test for independence.
But according to PIFA president Daniel Brammall, rather than view the changes as a regulatory hurdle, the reforms are an unprecedented opportunity for advisers.
He noted that the independence test refers to a series of prohibitions listed in section 923A of the Corporations Act.
“Meeting the legal test for independence has never been so achievable. There is so much hype and hysteria in the public domain about this right now but the transition is not as complicated as you might think,” Mr Brammall said.
“Basically, these boil down to just a couple of elements – conflicts of interest and conflicts of duty. When you take a guided approach to looking at your practice then you can methodically remove the obstacles, one-by-one, and legally promote your independence.”
Further, Mr Brammall said advisers should embrace the new culture in financial planning.
“These are not legislative threats, it’s a massive opportunity to create a very solid and valuable professional advisory firm in a short space of time,” he said.
Financial Planning has a lot of different organisations trying to promote their own little corner. Shame none of them have actually achieved anything. Realistically who cares what this bloke has to say?
Will PIFA ever release statistics about its members?
Average revenue per adviser, per client, percentage insurance etc?
If they only do investment advice for rich clients, are they really a model?
Why would this information be of use to you or anyone else?
As a PIFA member, it isn’t about how much I charge, it is about how much value the clients get out of it. Only a small portion of my work is about insurance/product advice and I don’t just focus on rich clients. Even if I did, how is that not a business model. Clients can opt out of any ongoing fees with 5 days notice. Every 12 months we sit down with them and mutually agree what we will do over the next 12 months. If they don’t need our advice for a few years, then that’s ok.
I am comfortable, proud even, with what I do and how I charge, just as you probably are. But to suggest because we work on a fee for service and not one where you take commissions or charge a percentage of their assets regardless of what you do for them is just silly.
Brammall were are already successful and acting professionally. The inference you make is nauseating. This is not an opportunity it is a horrendous amount of red tape that is suffocating our businesses. This pursuit to be seen to be professional due to the poor behaviour of some is coming at a huge cost and is ill conceived. Measuring the success of the industry by the behaviour of the lowest common denominator makes no sense and leads to the path of never ending regulation. Our success comes from the individual assessment of our clients measured by them remaining clients and referring new clients. No amount of regulation will change that or improve that. When are you going to get that ?
John, I agree there is too much red tape, but this has only been brought in because of the problems the industry has had not looking after the best interests of clients. As much as it is nice to think it is only because of the poor behaviour of a few, the fact is that most advisers are still aligned to the big banks, IOOF, AMP, etc and the way those organisations treated clients was abysmal.
I understand that in most cases it wasn’t necessarily of bad advice from the individual advisers but those advisers worked for the organisations that were responsible for ripping people off.
The quicker there are two classes of advisers, ie product salespeople and strategic advisers, the better.
I am not holding my breathe though, as the government takes its cue from the people that are conflicted.
One could also consider that red tape isn’t always a solution or a deterrent for bad behaviour or problems arising. If anything they tend to encourage people to cut corners. If things were simpler and more streamlined and logical/practical for clients and Advisers alike, many of the problems there have been in the industry wouldn’t have happened and we’d be considered a risk no more than Accountants seem to be despite plenty of shenanigans going on in their industry also.
Of course red tape is not the solution, but I call BS on the fact that if things were simpler and more streamlined that many of the problems in the industry wouldn’t have happened.
For starters, most of the things that have gone wrong in the industry had very little to do with actual bad advice. Most of it has been down to poor/corrupt decisions made by management of the banks, etc to do things like charge dead people and charge people for receiving no service.
The main bad deeds that have been done by financial planners are fraud or something similar. To say this wouldn’t have happened if there wasn’t so much red tape is laughable.
John can you elaborate on what you think Daniel’s implying? I haven’t taken anything negative from the article; I think it’s a positive take on these massive changes and it’s encouraging to see good suggestions coming from our colleagues and industry leaders like Brammall who seems to me to be offering solutions rather than complaining about things which we cannot change.
Hahaha solutions? Are you delusional?…
The best thing would to be make all super funds be able to allow clients to take advice fee’s from the clients super funds and stop allowing super funds to restrict who are allowed to take adviser fee’s out of the super funds. this would improve advice
Would it improve advice or just make it easier for advisers to charge clients without it coming out of their hip pocket. Two very different things.
It’s tax deductible to the fund and it means no matter where there fee comes from it isn’t conflicted… However I can’t think of one fund that doesn’t allow it I would recommend anyway that I can’t beat with at least 3 other products. So does it really matter in the end?..
Making things easier and more palatable for clients can go hand-in-hand with providing good advice.
I’d assume it would stop frivolous super switching and also allow those who can’t pay for advice from their hip pocket to receive it without being shoe-horned into a retail product. If the advice is about asset allocation and investment related, why shouldn’t an adviser be allowed to debit the very funds that are being advised on? Accountants charge a fee to companies they advise, lawyers the same, no?