Financial advice in Australia under review

The Quality of Advice Review is currently underway, seeking to ensure “that Australians have access to high quality, affordable and accessible financial advice”. However, a number of consumer advocacy organisations, including CHOICE, have raised concerns that the proposed changes will reduce consumer protections and open the door for conflicting or poor financial advice leading to significant loss and hardship.

CHOICE CEO @AlanKirkland had this to say on Twitter:

Let’s remember why the big banks all decided to get out of financial advice: when they had big advice businesses operating without strong consumer protection they ended up paying out millions of $$$ in compo for poor advice. Who’d want to go back there?

Are the proposed reforms opening the door for trouble? We welcome your views on the issue, add them to the thread below.

There is a lot of information to consider to here, but as mentioned in the above ABC article, here is a basic summary of the proposals:

Quality of Advice Review consultation proposals:

1.Regulation of personal advice
2.“General advice” should no longer be regulated
3.Obligation to provide “good advice”
4.Requirement to be a relevant provider
5.Personal advice to superannuation fund members
6.Superannuation funds to decide how to charge members for persona advice, allow collective charging
7.Allow super funds to pay a fee from member’s superannuation to an adviser
8.Scrap ongoing fee disclosure statements
9.Statement of advice to be maintained for retail clients
10.Make financial services guide available
11.Simplify reporting requirements
12.Allow adequate transition time, allow for providers to “opt in” early

The article goes on to mention:

Financial advisers or “relevant providers” who get paid a fee for service would still be required to meet existing professional, ethical and educational requirements.

However, people employed by product issuers such as super funds, banks or insurers, with only some training, would also be allowed to provide advice to customers.

CHOICE has specifically highlighted the following key points where action is needed:

  • Ban all remaining conflicts of interest in the advice industry.
  • Retain the best interests duty (this is in contrast to point three of the proposals).
  • Consider alternative models to financial advice for people seeking guidance.

For a deeper dive, here’s some shortcuts to the Treasury’s Proposals Paper and CHOICE’s full submission paper (PDF) to begin. We look forward to hearing your thoughts and impressions on the issue.

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AK’s twitter doesn’t really tell the story.

The big banks got into the Wealth Management business because it was a huge cash cow.

Push their own products onto clients with no regard as to the suitability or performance. Charge upfront fees, trailing commissions, fees to advisors for no service.

Once revealed and fees had to be reimbursed, or discontinued, these businesses were no longer the cash cows they were, and most banks have sold off their Wealth businesses.

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It’s about time a review of these services was undertaken .

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I don’t know if it is covered, but there is a serious shortage of ‘independent’ financial advisers. There needs to be some guarantees and assurances to clients that an advisor claiming to be independent actually is.

When I needed financial advise many years ago, there was only one truely independent advisor in the whole of a capital city who I could rely on the give me the best advise for me.

We rely on Choice for its independence. Surely we deserve the same for financial advise too.

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I’d like to stress the point that not all FAs are greedy crooks. I had one here in Perth years ago who put me on to a very good pass towards my retirement goals.
However my Superfund alloted a FA to my account. He lived on the other side of the country and was never asked for or required by me. On my query I was told that the Superfund did not impose the FA fee to my account and thus they did not have to refund me anything. Yeah right…:frowning:
I am currently on the lookout for an Estate Planner / FA and it surely is a bit of Russian Roulette to find a good one.

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Maybe Choice can provide some advice. Here is one article.

But, advice is one thing. If you are looking for a facilitator to get you into investments, then for independent service you would expect to pay for that.

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Estate Planning and Financial Planning are different needs. It may be best to discuss the differences with a legal representative, possibly one that would or has provided personal services such as Wills, Enduring Power of Attorney,

A lay view tempered by one recent experience.
Estate Planning is usually associated with having in place appropriate legal and professional administrative controls that may be necessary towards one’s end of life. The needs may be simple or for those with complex high wealth investments require more careful consideration.

There are separately FA/P who have expertise in rearranging how/where wealth is invested as we age and needs change. Many also offer to manage all those investments and financial matters indefinitely. The ongoing fees are substantial. There are risks. Our one adventure in that direction suggests it is best to independently research all your options before going near any service providers. Have a clear picture of what your real needs are and understand what is practical/wise in advance. If at all possible don’t enter into any discussions or agreements alone. Having a trusted family or friend present for second thoughts can save a poor choice.

On committing your trust, a FA/P has nothing to loose but your money? :see_no_evil:

P.S.
This discussion is a little off the original topic. Looking to the most recent posts it demonstrates consumers can have varying levels of understanding of the roles and services available. All the more reason IMO for stricter regulation of the various professions, the services they can offer and the conditions attached. IE Better protections against poor advice and performance for the average consumer when dealing with matters many don’t fully understand.

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I was using an independent financial advisor.

They helped us buy land and build properties. We discovered they were all massively overpriced. They also recommended I buy a substantial amount of shares which are practically worthless now (i’m about to sell them to get a tax benefit for the loss). I stopped seeing this company when they recommended I move some of my good investments into other products that would probably have benefitted them more than me.

Now i’m hesitant to use any financial planner even though I should see one before I retire.

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Some superannuation funds offer financial advice/planner to assist with planning for retirement. It might be worth approaching your super fund, if you have one, to see if they offer such support and what services they have.

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Yes, I think that’s the option i’ll take. I have a few years to go till i’ll have to take some action.

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