Vanguard is of the opinion that in order to support Australians’ diverse needs, advice and guidance should be available from multiple different sources and in different formats, including directly from product issuers, digital platforms and ecosystems or through a financial adviser.
In its submission to the Quality of Advice Review (QAR), Vanguard slammed Australia’s legal and regulatory barriers to advice and labelled the Australian regime as “out of step” with the current state and future direction of law reform in other jurisdictions.
As such, with the aim to promote increased access to affordable advice, the investment manager has proposed a complete revamp, including the replacement of the current definition of financial advice with a “sliding scale” of regulatory compliance ranging from unregulated information to lightly regulated “personalised guidance”, followed by limited advice through to comprehensive advice.
According to the investment manager, personalised guidance would encompass customer engagement by product issuers and digital platform providers that is intended to help current and prospective customers in their decision-making process under an “educational style, self-directed model”, which is devoid of expert advice recommendations.
Vanguard explained that the difference between guidance and advice would be dealt with through disclosure to the customer rather than seeking to define the line between “general advice” and “personal advice”.
“The other key distinction between guidance and advice is that guidance would provide options for a client to consider but would not deliver a singular recommendation as an advice service would,” the investment manager noted.
Moving on to comprehensive advice, Vanguard explained that it would be unchanged conceptually from the current definition of personal advice and would be subject to an overarching best interest duty and related appropriate advice and conflicts priority obligations.
Conversely, all advice other than comprehensive advice would be limited advice.
“The difference between the two types of advice would not be determined by the consideration of the customer’s objectives, financial situation or needs, which is the current basis of the distinction between general advice and personal advice,” Vanguard said.
“Rather, limited advice would be any advice that is limited in scope, limits the extend of the customer’s relevant circumstances that are considered in giving the advice or limits the products that are considered and compared in formulating the advice recommendations.”
Moreover, Vanguard has called for the replacement of the statement of advice with a “shorter, less prescriptive disclosure” delivered in different formats and in technologically neutral ways.
These recommendations combined, the investment manager noted, would “better align” the Australian financial advice regime to the US and UK regimes where, it said, there have been greater offers and take up of innovative digitally enabled guidance and advice models.
Never thought I’d see the day… Flogging their product and platform. No longer the lowest priced where it matters…legal jargon, no more plain speak. Who’s going to stand-up for the investor now? Can’t believe it. Wow. [color=red][/color]
I wonder what the interest of the product provider might be? Anyone? Anyone? So transparent, it’s embarrassing.
Back to product flogging again hey. Haven’t we spent the last 15 years with endless inquiries and a royal commission to do away with product flog sales culture? Give us a break. We dont need more constant change and turmoil. We need some stability now. ASIC cant even decide on the differences between general advice and general information, so good luck with all the other silos.
Everyone is just trying to reinvent the wheel. Current legislation is confusing, onerous and unnecessary. Regardless of what regulators do, bad eggs will always be there. Stop treating every adviser as though they are a thief.
Great- some new thinking- wonder if Levy has the gumption to recommended drastic changes
This is a scathing indictment on the Frydenberg/Morrison government and ASIC.
Vanuard is widely considered an ethical company, and when they say “Australia’s legal and regulatory barrier to advice and labelled the Australian regime as “out of step” with the current state and future direction of law reform in other jurisdictions.” nit needs to be listened to.
” customer engagement by product issuers and digital platform providers that is intended to help current and prospective customers in their decision-making process” equals sales not advice. Product issuers are always telling everybody how the advice industry should work and it always involves pushing their product – no mention of strategy -funny about that huh!
The last thing the financial industry needs is a behemoth fund manager to tell us how to run this industry.
wow – some one is talking sense….:D
This appears that Vanguard is suggesting lowering the compliance bar to allow them to use effectively-conflicted advice in a vertically-integrated product offering. This is what brought about the Royal Commission. Lowering the standard of advice disclosure documentation is not the right way forward, nether is allowing a vertically-integrated platform. The industry worked so hard to get away from this model.
How disappointing from Vanguard. This is nothing more than a thinly veiled attempt to seek regulatory carve outs for online product floggers. Once upon a time Vanguard was a respected manager with high quality offerings and a strong alliance with professional advice. Sadly they seem to be heading rapidly downmarket.
They made a strategic decision to dump insto money, now they’re seeking relaxed regulation to attract retail money, all the while trampling the advisers who give them massive inflows.
Here we go again with the “one rule for us, and another set of rules for financial advisers”.
Vanguard, if you want to recommend a product under the guise of “education”, then get an AFSL for providing financial advice and follow the same rules that financial advisers must follow!
Of course they do. Nothing at all to do with increasing their FUM and revenue. Sick of product manufacturers weighing in.
agreed, sick of very man and his dog weighing in but the people providing the advice – the advisers and planners!!!