According to Peter Johnston, the executive director of the Association of Independently Owned Financial Professionals (AIOFP), the “indiscriminate blame game” playing out among Labor and the Coalition is a “sure sign of an approaching re-electoral phase”.
“We currently have this happening with Minister [Stephen] Jones coming under heavy fire from the Liberal Party for the drafting errors of the QAR Tranche 1 proposed legislation and its content,” Johnston said.
On Monday, a joint statement from shadow treasurer Angus Taylor and shadow financial services minister Luke Howarth labelled the first tranche of the government’s legislation an “embarrassing blunder”.
“Financial advisers are today warning that it will add red tape and drive up costs for customers because it requires superannuation trustees to check every piece of advice given to members,” the statement said.
“This is the consequence of a government that is asleep at the wheel.”
Taking things even further, Howarth said “it’s time Stephen Jones steps up or steps aside”.
Johnston noted that while the AIOFP strongly backed the ALP ahead of the 2022 election “for good reason”, the Liberal Party has “recently acknowledged their past mistakes and are willing to work with the advice community in a positive manner”.
“The Liberal Party had purposely targeted the advice community to cull advisers by stealth with vicious legislation to starve and intimidate advisers out of the client relationship and it worked very well. Sitting on the fence was not an option for us,” he said.
“The ALP and Minister Jones started well after attaining office but have disappointed on several fronts in recent times,” Johnston added.
“Minister Jones’ pre-election promise to deliver on the education pathways legislation is the highlight, but his handling of the QAR response and Treasury consultation process has been poor, to say the least. It is quite apparent the Canberra bureaucrats have infiltrated his office in the past and drove these outcomes.”
The next six months to year, he said, is the “time to take advantage of politicians wanting votes and locking in desired legislation to circumvent the bureaucrats’ agenda”.
“Bureaucrats can’t change the law but they can influence policy development and direction in its infantile stages,” Johnston said.
“The role of the Canberra bureaucrats going forward is our greatest threat to achieving what we want as an industry, we must find a path to counteract their influence.
“We are pleased to note however that Minister Jones is currently seeking a new senior adviser, let’s just hope lessons have been learnt and this person is experienced from the market with no bureaucrat history or heavy connections.”
He added that the advice community needs an “ironclad bipartisan agreement” ahead of the election on the abolition of the consent forms, ASIC/CSLR levy terms and returning risk back to pre-LIF conditions.
Otherwise, Johnston said, “it will be another hard three years before this pre-election opportunistic window reopens”.
“The advice community needs to engage their clients with the political discourse and how current policy is directly negatively affecting their financial position and establish a healthy fighting fund to influence outcomes,” he said.
“We need to continually remind politicians that the advisers and their clients represent over 3 million votes, the AIOFP has a plan for both strategies which are currently being executed.”
Both major parties cannot be trusted as has been proven in the past.
AIOFP lost me when they said vote Labor and we can now see how that worked out… The pollies are all the same if their lips are moving they are lying. Same old same old so suggest you put all of your energy into looking after your clients or rewire to a simpler life of no red tape, no head banging and no talk fests expecting changes for the better when none is forthcoming…
I’m pretty sure I single handily changed the minds of maybe 500+ labor voters to NOT vote labor at the franking credit election. So we do have power, but I don’t care anymore, they are all the same and I’m not going to be able to swing those 500 voters in favour of Pauline! Liberal, Labor, all the same. Lots of hot air, no real action. rather invest that time into explaining why I’m putting my fees up.
You can do both. Put your fees up prior to each election. Blame the incumbent. Keep advocating for the opposition until we get a government who a) recognises the power we have at a micro level; and b) actually gives a stuff about what the public want.
Stephen Jones may as well start clearing the desk he is goneski!
Even if this is true, is it intelligent to come out in public and explain your strategy to bed both parties? It’s the opposite to the Government who say everything then do nothing. This is like telling everyone honestly what you will do so both parties are aware in advance and can plan on the best way to Gaslight the AIOFP. Really bizarre and impotent advocacy.
Disagree!
Any political staffer in a Ministers office, who has not war-gamed the possibility of representative bodies talking to both sides to get the best for their members, should resign.
Its always been an auction – that’s the game when there is no political affiliation.
No issues with AIOFP publicly stating their intended course of action. Pity the FAAA were too bloody NICE !
Completely agree.
Agree entirely. A smart member authority tries for agreed support from both parties so we become politically agnostic.
So you suggest keeping quiet?
How is that going?
I suggest talking about action on the Bill or even increasing a presence in Canberra not fluffing that this is the time to strike. All of the aoifp and faaa’s bleating has not helped 1 iota
“I suggest talking about action on the Bill..”
That boat has sailed. What do you really believe can be achieved – some minor concessions around the edges – like dropping the term “Qualified Adviser”?
This seems to be the approach of the current FPA – they just negotiate with whatever is put in front of them?
“Bureaucrats can’t change the law but they can influence policy development and direction in its infantile stages,” Johnston said.
Maybe so but ASIC, APRA, FARSEA, etc ALL INTERPRET THE LAW HOW THEY WANT.
AND THUS MAKE IT 10 times worse than the law was intended.
So the Bureaucrats & their Over Reach are a MASSIVE PROBLEM TO ALL AUSTRALIANS.
Costs imposed by ASIC and the government together with massive compliance overheads will be the primary cause of these failures.
The government is obviously unable to grasp the situation as to why financial advice is expensive!
The answer is very simple, it is the massive duplication of paperwork for example we must disclose our fees in our SOA, then again in our fee agreement and yet again in a document to be forwarded to the platform that pays these fees.
Now let’s take the SOA, it should only contain the advice written in plain English and based on the scope of the advice. Everything else should be removed.
There should be one fee agreement and that should be accepted by the platform as sufficient authority to pay any fees applicable.
Advice must be fit for purpose and should not be extended to include every scenario for example if we are providing retirement advice to a 50-year person, we should not be considering their aged care needs at that time. The scope of advice could exclude areas of advice that are not taken into consideration in preparing the advice.
As accountants we can provide affordable advice as we are not subject to the same level of compliance as our financial planning services. Accounting advice is far more targeted and is generally limited to a 2-page document including a scope of advice and the advice itself. The average cost is about $700 to $800, whereas the average cost of financial advice is about $2,500.
To get financial advice lower, the government wants to create the role of “Qualified Adviser”, whereas they should be simplifying the whole process to either “simple advice” or “complex advice”.
This would create a pathway to bring new advisers into existing firms which could meet the demand for “simple advice”.
William Mills Price Financial Intelligence
What you fail to see is that the measures you mention like scoping etc are not imposed by ASIC. They are imposed by overzealous and risk adverse licensees. Read the actual legislation if you don’t believe me.
ASIC Regulatory Guide 175.192(c)(ii) …
In administering the law, we will take the view that an SOA should: set out in language that is easy to understand, the reasoning that led to the advice, including: the scope of the advice.
Yes they want it outlined what the scope of advice is, not the reason for not giving aged care advice to a 30 year old contrary to what many licensees would tell you
Well then, care to demonstrate with a short SOA that is compliant? I don’t recall ASIC ever achieving it – do you?
Take a look at RG90. Again, the word “compliant” has been driven into us by licensees.
The safe harbour steps aren’t even a legislative requirement
I’ll leave this here:
https://www.ifa.com.au/news/33091-removing-safe-harbour-not-enough-levy
Some of the most incompetent and conflicted advice I have seen has come from accountants who were not qualified or licenced to provide financial advice. So I don’t think that is the answer.
Also, the average cost of advice is more than 5K if you remove intra fund advice, which skirts the heavy compliance obligations placed on independent advisers.
This is the 3rd cut and paste rot. Advice should be more considered than a transaction but the issue is that legislation should be the minimum standard. I.e. Levy recommended no soa, then best practise could be 8-12 pages of relevant tailored info (actual advice instead of current legal protections and disclaimers based on afca standards most licensees mandate). Asic still never, ever, provided a reg guide or example of a compliant soa covering super switching risk retirement etc. Accountants simple advice is the same that is often verbalised and both limited and often harmful from the examples I’ve seen
“As accountants we can provide affordable advice as we are not subject to the same level of compliance as our financial planning services”
Is this because you (accountants) are providing unlicensed financial advice? If qualified advisers didn’t have the current compliance regime we also could provide cheaper advice.
If you are an accountant, get qualified, licensed then come back and make your statements!