Contrary to the wildly hyperbolic predictions of some commentators – and perhaps wishes of some rival sectors – retail financial advice was not killed off in 2013. But it has been a year of unprecedented red tape and regulatory headaches.
While running businesses, worrying about staffing, rent and licensing issues – not to mention client portfolios – advisers have had not only to keep track of the legislative developments and their implications, but put costly and time-consuming processes in place to ensure compliance.
For some players in the market, this year has been more painful than for others. ifa has closely followed the collapse of larger players such as AAA Financial Intelligence and Australian Financial Services (AFS) Group, as well as smaller fish such as Perth-based boutique Chambers Investment Planners.
There are some who have criticised the decision to publicly broadcast these tales of failure and non-compliance, concerned the headlines may fuel negative perceptions of the industry. There are many more that would have to admit they secretly relish these stories and are always eager to read on.
While we have chosen to report cases of advisers doing the wrong thing, it is always with the intention of holding the vast majority of hardworking, compliant advisers up as a model of best practice and to help weed out bad apples.
Moreover, ifa endeavours always to set these stories within a broader context. For example, the demise of AAAFI is not just a story about rogue advice and regulatory intervention; an ifa investigation has also closely followed the AAAFI advisers who have done nothing wrong and are now locked in legal battles with their former licensee over the outstanding commissions owed to them. Beyond the initial headline, ifa is often the vehicle through which those singled out by regulators can give their side of the story.
Even the case of Chambers – a company which in many ways personified all that was wrong with a pure commission fee structure – has revealed broader problems with the PI system and the toothlessness of dispute resolution schemes like FOS.
These stories – as well as the unprecedented levels of red tape that have dominated headlines in 2013 – are worth reflecting on because they remind us that this year, at its core, has been a story of survival.
The FOFA reforms effectively, if unintentionally, forced an ultimatum – advisers had to choose between calling it quits, as many have in the UK post-reform, or joining the new paradigm.
ifa has found overwhelmingly that the industry has copped these changes on the chin, with a ‘heads down bums up’ work ethic of which it can be proud.
This has resulted in a greater sense of community and culminated in an industry that is stronger for having been through the past months, the net effect being benefits for businesses, families and clients.
It’s good to see that changes are being made, but it does not help the poor people that invested much of there life savings in LM, they was sold something that was described to them as assets of over 3 billion$. And as good as any bank around the world. The people who are supposed to be the professional ones that made large sums of monies from commission, people seek advise from the FA’s, so in the case of LM were they being professional or was this just greed on there behalf, what did ASIC do for investors I will tell you NOTHING.
It always seems like the media and vested interests in our sector whip up hysteria about all the “rogue” advisers doing the wrong thing. This is followed by a tsunami of red tape for those advisers not doing the wrong thing and then a sea of crocodile tears as the pool shrinks for all concerned.
As the fund managers have learned with their ever shrinking pool of funds under management, it all starts with the adviser. If the adviser is spending half his/her time dealing with compliance no FUM which inturn leads to less advertising revenue for IFA.
So easy on the hysteria guys. Most of us advisers are honest and hard working and always put our clients best interests first.