‘What are we trying to do here?’: Advice bodies need to set clear intentions ahead of election

In a new episode of the ifa Show, Neil Macdonald said his personal view is that the politics won’t make the difference, but rather what those in the industry are doing will.

“If you go back to the financial services reform way back in 2002, the intention here was basically to make advice more accessible and more affordable,” he said.

“Now the last 20 years has shown that’s not quite worked, and the solution seems to be, ‘well, what we’ll do is have more legislation and more regulation’ and clearly that’s not quite worked either.”

With ASIC soon set to release its Quality of Advice review, Mr Macdonald said associations should collaborate and be clear on the message and intentions the industry wants to give to the government.

“… What are we trying to do here? What consumer outcomes do we want to get? And then how do we actually reduce the red tape and the legislation and change it so that it reflects what financial advice is?

“Because the reality is the Corps Act focuses very much on product advice, as opposed to what most financial advisors do, which is strategic advice.”

Mr Macdonald’s comments come after the Association of Independently Owned Financial Professionals (AIOFP) and executive director Peter Johnston launched the “engage and enrage” campaign, which called on financial advisers across Australia to put aside political differences in a bid to unite and incite change within the sector.

The AIOFP outlined five amendments as part of the campaign, including:

• The FASEA exam to be held after the degree course is completed. 
• Advisers with more than 15 years of experience do not need to complete a degree course but must complete an ethics unit.
• Risk commission to be increased to 85/20 per cent with a 12-month clawback.
• Opt-in to be every three years, but clients can opt out at any time.
• The proposed compensation scheme commences from 2008, as commissioner Kenneth Hayne instructed. 

“We have a message to the current government – eliminate the ‘kill adviser’ theme from your legislative agenda and incorporate concessions for those experienced advisers to ease them out of the industry,” Mr Johnston told ifa.

“Otherwise you will have 20,000 advisers, 50,000 employees and 4 million clients potentially voting against you within five months.”

Listen to the full podcast with Mr Macdonald here.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.