Amongst the list of top priorities for the FSC is reducing the cost of advice by abolishing the safe harbour steps for complying with best interests duty and simplifying documentation requirements for the advice process.
In its report released this week, the FSC said the removal of the safe harbour steps should be the “first priority” of the government in order to enable a principles-based advice model under the existing regulatory framework.
The report also stated that the statement of advice is “driving up the cost” of financial advice and backed calls for the SoA to be replaced with a letter of advice.
It comes after the FSC released a white paper late last year which proposed a new framework that could reduce the cost of advice by almost 40 per cent (near $2,000).
KPMG’s analysis of the FSC’s recommendations found that the cost of providing financial advice would be reduced from $5,334 to $3,466, would save advisers up to 32 per cent of time when dealing with clients and allow them to provide advice to an additional 44 new clients each year.
Other priorities named in the report included maintaining existing tax rules for superannuation, increasing access to life insurance, reform funds management tax settings and finalise the implementation of a product modernisation regime for life insurance and managed funds.
“All sides of politics have an opportunity to use the upcoming election to think about how the financial services sector can support economic growth,” FSC CEO Blake Briggs said following the released of the report.
“Financial services is worth $161 billion annually to the national economy and meets the needs of millions of consumers.
“Recent years have been challenging for Australians and the national economy. To put these challenges in the past, governments should continue to focus on policies that promote growth, boost confidence and encourage business investment.”
So changing the name of a document is all of a sudden going save $2k per client. Maybe if we change the name of a few more documents it could all be free. How about changing the fees ASIC charges to run a register that allowed people like Melissa Caddick to thrive because with all that cash ASIC got paid to run the register they wouldn’t even investigate a complaint to them when it was handed to them on a platter???
IMHO making initial financial planning advice tax deductible is the solution. The public, government and regulators do not have an appetite for reduced compliance and regulation because of the potential blow back. Therefore, making advice deductible is the only viable way forward if your deciding how to make advice more affordable.
The trouble with that is that many clients are retirees and are below the tax free threshold….just a thought
We’ll then the business planner in me says that your business risk is a potential declining revenue and dying clients. To offset this decline, you may need to consider refocusing acquiring younger (probably tax paying clients), who would benefit from advice fees being tax deductible.
Let’s take it a step further….why doesn’t the government fund it like they fund the medicos…then everyone will take financial advice and have sound retirement plans as self funded retirees, be adequately protected with insurance, have reasonable levels of debt which will all be paid off, well distributed estates, …..heck it sounds like we could solve all Australians’ financial problems if the govt paid for the advice 🙂 🙂
Fincare?
Maybe that will help, but fundamentally for me it is the process that is the problem. If a client wants my advice without me having to produce an SOA that he/she/they will never read then they should have the option to say ‘don’t bother, I don’t want to pay for that’. I could then document the advice on an A4 page. Why are we making clients pay for something they don’t want. Stripping this cost out alone will make advice so much more affordable.
Accountants already give this advice for free ha ha hilarious
Parts of it is already tax deductible – ongoing advice fees relating to investments, advice fees paid from super fund. We just need better regulation where advice documentation is either eliminated or can be produced in minutes without the fluff that is regurgitated from FSG.