The AIOFP’s paper, titled 6 Critical Issues for Advisers and Consumers, details a number of policy proposals aimed at reducing costs for advisers, including the elimination of the TPB as an adviser regulatory body and the establishment of an adviser panel to consult with ASIC on future regulatory change.
In addition, the paper recommended the new code monitoring body be established under FASEA to save further regulatory duplication for advisers, while the authority should be brought under parliamentary scrutiny, as recommended recently by the House economics committee.
The report, compiled by AIOFP executive director Peter Johnston as well as a number of the association’s adviser and licensee members, estimates that around 10,000 advisers could leave the industry by the time the FASEA education standards framework is fully implemented at the end of 2025.
“[These] 10,000 advisers have 250 clients on average with 2.5 staff, mostly women. The staff include one full-time manager, full-time paraplanner and one part-time. The average turnover in the industry is $650,000 including small to very large businesses,” the paper states.
Based on these assumptions, the paper suggested 2.5 million clients could be left without an adviser in the next five years if rising regulatory costs in the industry are not addressed.
In addition, better management of the FASEA standards process emerged as a major theme in the report.
As well as closer government scrutiny of the authority, the association urged FASEA to provide better disclosure on areas for improvement for advisers who had failed the industry exam, and suggested a separate educational category needed to be established for risk advisers.
“In situations where risk advisers are restricted in terms of their ASIC licence, via their licensee, to only provide advice on risk insurance products, it does not make sense that these risk advisers should have to pass exams covering areas irrelevant to risk advice,” the paper stated.
“This issue is further compounded by the fact that risk advisers have to requalify via a bachelor degree consisting of up to eight university level subjects, many of which are unrelated to risk advice. Of the 76 topics currently offered over the eight modules, approximately half have no bearing on the skills required in order to provide specialist risk advice.
“Studying and passing exams in these courses is not only wasteful in terms of time, cost and resources, but is, more importantly, a potentially unfair way of forcing competent risk advisers to exit the profession.”
The paper will be debated with representatives of both sides of Parliament later this week in a virtual members event hosted by the association.
IFA why don’t your like/unlike buttons work properly anymore?????????
Been wondering that for months !
Yes, I’ve been having the same problem. Doesn’t work on Google Chrome or Explorer browsers.
Biggest issue in the industry!
Policy decisions made by a Liberal Government have resulted in the destruction of affordable financial advice for everyday Australians.
pushed mainly by the Labor government from the begining, life would be worse under Bill
Be hard to be worse.
LNP, ODwyer and Frydenburg are disasters to real Financial Advisers and small business. They stink !!!
Since 1996, Labor has been in power what from 2007 to 2012. The rest of the time it has been the Liberals. What a bloody mess. Liberals need to be award that this mess is on them.
you may be right, but the LNP have been responsible for FASEA, etc.
they are made by treasury. they listen to treasury. not themselves.
I read many of the submissions from Treasury to the Royal Commission. One could have been excused for believing the submissions were straight out of the ISA rule book. Treasury certainly are not friends of Financial Advisers and appear to know nothing of the real issues. Very poor. It made me remember, when I was at Uni many years ago with an official from the Bank of England – educated idiot.
concentrate on running your AFSL Robert.
Spot on about FASEA. They urgently need to be pulled into line. Many of us who went early with education and had high hopes for FASEA have been left dumbfounded by FASEA’s arrogance and stupidity. They have treated us like naughty little school children instead of working collaboratively with us for the betterment of the profession. The result is a set of policies that completely miss the mark and will ultimately harm consumers. I think the politicians are finally waking up to the disaster that is unfolding. Let’s hope they embrace AOIPF’s suggestions and make FASEA accountable.
Amazing what can be achieved, when an industry body puts the needs of Australians and Advisers first. Unlike another self serving group, found wanting at a Royal Commission & gets kick backs from large insto’s whose only contribution to the advice landscape in the 20 years was the ability to witness a stat dec. Why is it that the AIOFP, FINSIA, the SMSFA, the financial planners and stockbrokers association form a combined front and straight away we get a FASEA extension. The AIOFP is kicking butt, well done, amazing what’s being achieved as there ranks continue to grow with Professional advisers. For the sake of providing professional advice in Australia I wish them well.
I can’t help but notice that one of the six critical issues they wrote about wasn’t referenced in this article – no. 1, individual licensing.
While there are some good initiatives in the paper – yes, regulations are out of control and recently receiving my TPB renewal notice hardly brought a smile to my face – the self-serving arguments mounted to defend the AFSL model makes it hard to support this release.
If we’re talking about reducing costs, then how is it that the millions we pay to licensees each year don’t contribute to the high cost of advice, but the $500-odd I have to pay the TPB does?
Why is it that every other profession manages to exist without this bloated group sitting between the practitioners and their regulators – but financial advisers couldn’t possibly manage such a thing?
Some questions for the authors of that part of the paper:
– What’s the total your AFSLs received in license fees over the last 12 months?
– What other revenue have you received – pre-FOFA commissions, shelf-space, ticket-clipping malarkey, etc – in the last 12 months?
– What’s the average fee an adviser in your license group has paid in the last 12 months?
Let’s call this for what it is – those on the gravy train are terrified we’ll use individual licensing to blow up the track, so they want to distract us from the plunger with their posturing and pandering.
Frankly, so long as the snouts keep fighting to maintain their spot in the trough, I’m embarrassed to have my occupation associated with this paper.
If you don’t like working with an AFSL go and get your own – easy to get and cheap but not as easy to comply with the rules as you would think. Stop whinging and start acting!!
You can start your own licence now. What are you waiting for?
Few points:
– I am getting my own licence. I will be surprised if it’s any harder than dealing with the inane ‘guidance’ that’s duplicated across this industry by compliance departments basing their work on their ‘opinion’ instead of the law.
– Self-licensing within the AFSL system is markedly different – and inferior – to individual registration. Self-licensing is simply a less-bad version of a rotten system.
Individual registration would put us in control of what we do, instead of a tier of overpaid, under-performing ‘licensees’ frantically protecting their ticket-clipping racket.
– If we’re all as obsessed with making advice ‘affordable’ as we say we are (and it’s not just a smokescreen to allow us to keep hoovering up conflicted remuneration) then abolishing AFSLs should be the first and only order of business.
It simply should not cost over $20-$30,000 for any person to provide financial advice in this country. That we all accept that as normal is bewildering. No other profession operates under such a suffocating burden.
And the idea that this cost would be replicated if we were individually licensed is an outrageous lie these licensee heads keep putting out there, taking us all for fools.
They should be ashamed to mount such a viciously stupid argument.
But instead they’re placating us by focusing on opt-ins and FASEA and the TPB and pitting advisers against each other.
– I’ll stop whinging when people keep trying to drag this nascent profession – that I love practicing and would like to stop reading about in the news – back to the dark ages just so they can keep lining their pockets.
Some years ago when Suncorp closed up shop an adviser said “i considered self licensing but financial advice is too risky and the strategies I offer are also high risk and so I prefer the licensee to take the risk”. I think that sums up the majority of Advisers in Australia, ultimately there in it for the short term, or they don’t want to be held responsible.
And because of high risk advisers like that, their licensee has to have layers and layers of protective bureaucracy which is costly overkill for the majority of other advisers under the licence. The majority of low risk advisers are the ones who would be far better off if self licensed. They are also less likely to encounter barriers when applying for a licence.
Law needs to change to make single registration possible. It makes sense. But I doubt that will happen. Good luck on own afsl not having a go but it’s not the silver bullet.
AFSL’s may become extinct.
They already are, just ask and “Life Coach”, Wellness Coach” or “Money Coach”.
My comments are not being shown on these threads. Censorship.
That comment was.
Too many rational ideas, we live an age of woke unconsciousness – pragmatic concepts like the ones proposed have not made it into our industry for a decade – optimistically a resurgence of common sense would be welcomed.
Do you reckon Jack Flader helped Peter Johnston and the AIOFP with this paper? Was that $650k a year average industry turnover pre ongoing commissions being switched off or after after ongoing commissions being turned off? We all know how those AIOFP members loved and were addicted to the ongoing commissions from previous articles.
Of course it’s ok for 1000 vertically integrated intrafund “adviser” marketing reps to be addicted to the ongoing intrafund fees that those fund members have never given informed consent for, nor can opt out of.
That doesn’t make any sense. Add further. How will they be affect by the Jack Flader/AIOFP overestimated client numbers.
While I don’t agree with all these points (you need to be holistically educated to provide risk advice properly), its just damn good to see an industry body actually fight for advisers.
Very refreshing, and if the TPB gets correctly abolished (it is completely pointless) then I’d be switching my membership to these guys ASAP.
The 2.5 million clients estimated does not include the 2 million clients being dropped right now as “low value” clients due to the increasing costs or regulation make it unprofitable to manage any client that does not generate at least $3,000 pa in ongoing fees but this depends on each practice. For example, I have been told to drop 320 clients and CBA Private Bank recently switched off fees for all clients with less than $2.5 mil under management and Maquarie did the same 20 months ago getting rid of clients with less than $1 mil invested or paying less than $10,000 per annum in fees!
WAKE UP EVERYONE! The industry is going backwards if we cannot help the people who most need help.
I’m pretty certain the figure needed is more like $4,000 pa per client ongoing.
These guys are doing good work.
Seriously the exam is not that bad, it’s layer and layer of regulation aka RED tape.
It continues to amaze me that people think that “risk specialists” are special & shouldn’t have to complete the exam & units. The same could be said about people that only deal in
– swaps & derivatives
– shares
– investment specialists
– superannuation
and the list goes on…….
why are they deleting comments..?
my guess is it’s more of a case the guys/gals moderating this are “working” from home.
Dear IFA, Could you please explain why you refer to the FPA as a “professional body” and the AIOFP as a Industry body. Let me spell it out for you the FPA is in no way shape or form any where close to being a professional body, and it’s extremely offensive for blindly follow their media releases. There have been many suicides in this industry and some of us feel the FPA have tied the noose around their necks. I’ll be boycotting IFA awards, your presentations, podcasts and soon start boycotting the companies that advertise across your media platforms.
Good question.
couldn’t agree more – FPA & AFA did nothing for us other than ruin the industry – yet still take over inflated incomes, why do they earn $500k??? for doing what???
Sorry Peter I disagree. If risk premiums are paid by super then the risk adviser should have a broader understanding of superannuation, retirement planning, estate structure, tax and wealth creation. So they must be competent in providing broad based comprehensive advice and pass the FASEA exam, like all other financial planners who specialize or provide a holistic adviser service to their clients. That said I do agree with the cost to provide advice and client access to advisers is a significant concern to all (clients, advisers and governments). More than money financial planners role is to instill confidence, direction and support for clients. So ultimately as individuals in society we can all financially stand on our own two feet, be in a financial position to help others (who may have fallen between the cracks) and as a society we require less dependence on societies purse.
Sounds good to me
FARSEA, the straw that broke the Advisers back.
After 20 years of ever increasing BS REGS, costs, admin and rubbish, now FARSEA to top it off.
Every Adviser, regardless of multi degree aligned qualifications, Dip FP, SMSFA Specialists, 20+ years experience, 20+ years CPD, etc has to waste at least:
[b]- 120 hours of their time doing the Ethics course X $330 / hr = $39,600 + $1600 course costs = $41,200 plus
– Exam costs and time wasted approx $10,000.
So there’s over $50,000 of wasted time costs to every adviser x 15,000 Advisers = $750,000,000 [/b][b][/b]
Thanks Pollies, FARSEA and ASIC for wasting HUGE time costs for already stretched advisers.
PS – for adviser that are not relevant degree qualified and experienced, then FARSEA makes sense. And should be adjusted accordingly for Life only Advisers too.
yes, its not good is it ?!
120 hours on an Ethics course? How slow are you?
I guess you haven’t look at the course or FARSEA guidance – they say 120 hr minimum required.
FARSEA guidance = 120 hrs minimum time per course.
I guess you must know much more than the course regulators hey ????
Anonymous.0 – how much time have you spent on ethics?
FASEA guidance is a massive overestimation. Anyone with a double-digit IQ will get it done in less than 40 hours. After reading these comments, I’m sure that some of the overestimated 2.5m client may enjoy not dealing with a financial planner. And let’s face it, if a client finds financial planning a worthwhile services they will find another financial planner. No different to when your mechanic or accountant retires, you’ll find someone else if you think you need to.
” No different to when your mechanic or accountant retires, you’ll find someone else if you think you need to.”
Except the new Financial Planner will be charging $5,500 for SOA upfront and $4,000 pa ongoing. How does that solve the problem?
“If they find it a worthwhile service”, they will pay if the see any value in it. If they don’t see any value in it, they won’t pay for it. No different from the last five or so years.
Anonymous.0
“”If they find it a worthwhile service”, they will pay if the see any value in it. If they don’t see any value in it, they won’t pay for it.”
Sounds like a good reason to for certain Product Manufactures to stop charging for Intra Fund Advice fees to me. You make a good point.
Kelly ODwyer ?
Thanks for the FARSEA tax you gave us. I guess you could do the course in 1/3 of the time advised. But you don’t have too do you.
Not 120 hours. Haha!
Same here, nowhere near 120 hours.
In preparation for the FASEA exam I spent one weekend going through things – about 16 hours. I sat the first exam and did not do any other preparation and passed. I would expect many others would have done similarly.
Fingers crossed at least some of this is changed. Imagine if all of it was!!
Well done Peter and the team at AIOFP – LOVE your work and we all appreciate your efforts. Hopefully this powerful and relevant message will get through to the people making the decisions.
Good paper re the projections of the economic impact. However, risk advice is complicated and should take careful account of superannuation laws and it pays to have a good general knowledge about financial planning. Do we really still need very narrowly qualified riskies, especially those that funnel that large majority of their clients through only one or two insurance companies?
Yes we do need these riskies – or do you think consumers should buy Direct Dodgy Life Insurance, that generally costs more than advised insurance, has more limited terms and no adviser to help at claim time.
So yes, i think its very clear we need Risk only planners.
That’s a false argument – the choice isn’t between ‘narrowly qualified riskies’ and ‘rubbish direct insurance’.
It’s between ‘narrowly qualified riskies’ and ‘broadly qualified advisers who provide risk-only advice’
Given the wide range of areas risk advice can touch on, I find it hard to defend the idea that the former should get a carve out from the rules the rest of us have to operate under.
Thank you AIOFP.
Thank them for what? Alll the puff? Succession is a bigger issue for the industry, advisers and our clients. Think about it.