There is an old saying that today’s news is tomorrow’s fish-and-chip paper, so what to make of yesterday’s news being wrapped up as guidance to the financial planning industry?

While the Australian Securities and Investments Commission (ASIC) is to be commended for much of the work it undertakes, a detailed analysis of what Australian Financial Services licensees were thinking 18 months ago would appear to be of negligible value.

Earlier this week, the regulator released Review of financial advice industry practice: phase two, the culmination of an investigation into Australia’s top 50 licensees that began in 2009.

In December of that year, ASIC sent questionnaires to the 20 largest AFS licensees by number of representatives operating under the license, although it didn’t reveal which these were, and published its findings, observations and recommendations in September 2011. It then repeated the exercise with the 30 next largest licensees to round out the top 50 responding in early 2012, and it is these findings that have just been released.

Overtaken by broader reform

But while the feedback of the top 20, reportedly covering over 13,000 individual advisers and 4.6 million clients, was relevant and eagerly anticipated in September 2011, the latest review seems dated and distant.

Quite frankly, we’ve heard it all before. Specifically, ASIC started this process to examine financial advice-compliance systems and the risks facing gatekeepers in the financial advice industry, but this had been overtaken by broader reform.

“As we saw from our 2011 review of the financial advice industry, these reviews provide significant benefits for both licensees and ASIC. The responses strengthen ASIC’s understanding of the different business models used and the types of risks licensees are exposed to. This, in turn, enables us to efficiently use our resources by focusing more on those licensees with inadequate risk and compliance frameworks,” states the latest ASIC review.

But surely the demands of the Future of Financial Advice (FoFA) reforms have fundamentally changed business models over the past two years?

Together, these top 21 to 50 licensees covered 4436 individual advisers, of which the smallest licensee had 37 advisers and the largest licensee 351. Of the total advisers, 64 per cent were authorised representatives and 36 per cent were employee representatives of the licensees. The top 21 to 50 licensees had a combined total of 1.35 million clients.

Other less-than-startling revelations included that the majority of big advice firms are majority owned by big product firms and the majority of the advice income comes from product.

If fees are banned, just calibrate

However, while ASIC plans to continue monitoring newly licensed financial advice businesses and announced plans to visit around 60 established AFS licensees to discuss implementation of the FoFA reforms in the coming year, not everyone is convinced.

Bluepoint Consulting director and independent financial adviser Tony Bates believes a retainer or flat-fee model is purer than the model which FoFA has been trying to impose on the industry.

“It is no wonder the majority of advisers are feeling bogged down in FoFA compliance. Today (July 31) is the last day that most advisers need to send most clients a fee-disclosure statement,” he said.

“If the government ever bans asset-based fees – which it hasn’t this time around – an adviser just needs to calibrate the assets on a regular interval basis and set a fixed monthly fee that approximates the same.”