The new obligations are tucked away in the Australian Securities and Investments Commission’s Regulatory Guide 148, which is ostensibly aimed at platform providers.
Section E of RG 148 points out that “the client’s rights in a platform are a financial product”.
“Opinions or recommendations intended to influence, or that could reasonably be regarded as intended to influence, a decision about using a platform will be financial product advice,” according to ASIC.
Statements of advice (SOAs) are “expected” to include advice about why a particular platform and/or particular investments are recommended, including:
“The service offered by the platform and how that service will benefit the client in comparison to the client investing directly or through one or more other platforms,” reads RG148.
In addition, ASIC expects SOAs to identify the feature of the platform, including the range of investments offered through the platform, fees and costs associated with the platform, any significant tax implications, and any implications for the client if they leave the platform.
The Fold’s Claire Wivell Plater said that while advisers have typically wrapped up their strategy, investment and platform recommendations into one piece of advice, they are now required to “separate it out”.
“[Advisers must] specifically consider whether or not using a platform is in the interests of the client,” she said.
Minter Ellison partner Richard Batten told ifa it wasn’t surprising that ASIC wanted advisers to justify their platform recommendations – but it would have made more sense to include the requirements in RG 175: Licensing product advisers – product and disclosure.
But he said the requirements to identify the features of the platform were unnecessary, because they are included in the investor-directed portfolio services (IDPS) guide produced by the platform provider.
So what’s new??Considering a platform (wrap account) is, and always has been, a financial product an SoA should have always included the reasons why the particular platform, its features and the particular selected financial products, are appropriate for the client.
This reasoning should explain why the client should use a platform rather than direct investment.
If an adviser is switching a client from an existing product to a platform, the costs disclosure in the SoA will need to be more than ‘headline figures’. The SoA must include include the ‘from’ product exit costs and the ‘to’ product entry costs. In addition the ‘significant consequences’ of the switch (to the platform) must be stated. A significant consequence of a switch is the ongoing fees the platform charges
Firstly its FOFA
Then its Churning
Then its Everyhting
seriously ASIC officers probably have to do their Bachelor DEgree in FP then be a CFP then run a practice to even come close to what we have to do or they feel need us to be compliant
LOL give us a break….seriously. Let’s create a separate heading called “What is a platform and why it’s good for you” just in case the client missed it in the recommendation section. We should probably re-explain what an SOA is too….because I reckon even I have forgotten what its purpose is/was.