Financial planners should be wary of offering “cookie-cutter” advice when the Future of Financial Advice (FoFA) reforms start in July, ASIC commissioner and deputy chairman, Peter Kell, has warned.
Kell says the provision of scaled advice will be made simpler under FoFA, but ASIC will be on the lookout for organisations that are tempted to shoehorn all (or most) clients into a one-size-fits-all solution.
“That’s a really important question – how to get the balance right between cost- effective advice, and not simply giving cookie-cutter advice,” Kell says.
“At one level it’s important to understand [that] some of the cookie-cutter advice we’ve seen has put people into very high-risk strategies, irrespective of their financial circumstances.”
ASIC also will monitor the provision of advice online, Kell says, noting that the regulator understands that online advice will never replace the face-to-face variety, and that a website can never take the place of a good financial planner. But, he says, a growing number of organisations are investigating how an online offer can be structured to provide timely, cost-effective advice.
“Some of the models seek to integrate online advice with other delivery channels; others seek to use online advice for relatively simple products or needs,” he says.
“The question for ASIC is how can we make sure that we can help online advice grow in the right way, so consumers can get greater access but not end up with inappropriate strategies or products?”
The full version of this article was originally published in the May 2013 edition of Professional Planner.
