Elements of the Future of Financial Advice (FoFA) reform may illicit radically disparate views but what cannot be questioned is the action it has demanded from the industry.
Tony Virtue of Virtue & Partners says the profound impact of the proposed FoFA reforms on millions of people around the country have spurred him into political action.
He was amongst the representatives of six adviser associations to attend a Liberal Party lunch in Sydney with Senator Mathias Cormann, Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation, as guest speaker.
“We can’t be a protected species as an industry but some of FoFA has been beyond the pale,” Virtue explains. “Two or three years ago, I would not have attended a function like this. This is what FOFA does. It forces you to get up and do something.”
Sharing some of his concerns and a table at the event were representatives of the Association of Financial Advisers (AFA), the Association of Independently Owned Financial Planners (AIOFP), the Boutique Financial Planning Principals’ Group (BFPPG), the Corporate Super Specialist Alliance (CSSA), the Financial Planning Association (FPA) and the Self-Managed Super Fund Professionals’ Association of Australia (SPAA).
Virtue, who is a member of all six, said the presence of the association heads reveals that although each association has a different view of the world, they have more in common than they have differences.
“I’m very proud of the contribution each and every association has made,” he said. “It’s a bit like going to a party. You have a different perspective, based on where you are in the industry. But we have much more in common than what makes us different.”
Senator Cormann used the lunch to formally call on the Minister for Financial Services and Superannuation to delay the implementation of FoFA legislation.
Asked whether the Coalition, if it were in power, would reverse the tax penalties recently imposed on people who have inadvertently exceeded their concessional caps, he said that “people who make inadvertent errors in relation to excess contributions should be able to rectify those errors” and “there might be fees with processing it, but not the sorts of penalties they are currently exposed to”, adding that the Coalition was currently looking at the issue and could not make any comment about what they might do retrospectively.
In a response to a call to have adviser fees made tax deductible, Senator Cormann said that it was a Budget issue.
“Right now the Budget is in a very bad state … I understand that financial advisers around Australia have the aspiration of having their fees made tax deductible,” he said. “It’s something that will be in the mix of the whole issue, once the Budget is in surplus.”
Senator Cormann echoed adviser concerns around trusteeships, reporting standards and corporate governance of industry funds.
“The Cooper Review made some very sensible recommendations on how corporate governance and transparency could be improved,” he said.
“The Government has been very unenthusiastic about this. We think there are some pretty basic things that should happen very quickly… We do have to have better arrangements around broader competition, around management of perceived conflicts of interest in terms of directors who want to sit on multiple boards… There should be better management of conflicts in relation to Labor Party transactions and there should be increased transparency around investment performance; there should be a more level playing field around a couple of requirements for all superannuation funds operating in Australia.”
“These are some issues we are likely to pursue in the context of MySuper legislation that is coming out,” Senator Cormann added. “We are going to be moving amendments along those lines to all these sorts of issues.”
FOFA has turned into a joke and self serving political vehicle for a whole group of people out there who all have one thing in common –
they love to advise advisors on how to advise clients , yet none of them actually practice or accept the responsiblity of providing advice
ie-most of them dont have the guts, brains or desire to sit down with a client and map out their financial needs year in , year out .
They want to share in the process whithout actually sharing in the responsibilty
.I Cant recall seeing any of these faceless people at client meetings , weddings, funerals , birhts or marriage break ups . I cant recall seeing fund managers sit down in front of clients when they have taken garbage bets on stocks which have tanked,
or overpaid ASIC public servants sit down and explain to clients why they let Storm Financial or Westpoint run rampant although they received numerous warnings .
And the bottom line is – clients will end up paying more for advice
And as for those operators in the Industry Funds space , give us all a spell – you use the same funds managers as everyone else , (70% of whom couldnt even beat the S&P ASX 200 index over the last 5 years)
I have some news for you people , there is no such beast as “limited intra fund advice ” You are either on the bus and giving advice , or alternativley keep a lid on it .
.One thing iam fairly certain of is that FOFA will not lead to a better consumer outcome ,you just cant legislate for integrity , honesty or the desire to help people
The government and various other interest groups wouldnt try this latest space wasting and daming excerise on laywers , doctors or accoutants because they would be challenged in the highest court
And thats pretty much where this legislation will end up -in court becasue there is no way iam going to stand by whilst faceless people try to destroy a business that took 30 years to build and which will result in my clients having to pay more for an excercise that will not add 1 extra dollar to their account balances .
too bloody true.
governments with time on their hands wanting to stick their grubby fingers into others pies.
i too spent decades building a business without one client complaint but i only ever got demands for more and more compliance paper.