Leading national accounting and wealth advisory group Chan & Naylor has welcomed the news that the Australian Securities and Investment Commission (ASIC) will launch a new upgraded financial adviser register in early 2015, and regards this as a positive step towards instilling greater industry transparency for the mutual benefit of Australian consumers and the financial advice sector, albeit with an important component still missing.
The new register will include multiple tiers of information on all advisers, including their history and qualifications, areas of expertise and important details about the ultimate ownership of the financial services licensee that the adviser operates under. According to David Hasib, a Partner at Chan & Naylor Wealth Planning, presenting all of this information for the first time will provide consumers with a better understanding of who they are dealing with and, crucially, whose products are being represented to them.
“Having a consolidated and comprehensive view within a central framework that is controlled by the regulator will enable consumers to make a more informed decision before engaging a particular advisor,” said Mr. Hasib, who recently argued that the issue of conflicted remuneration was not satisfactorily addressed by the proposed Future of Financial Advice (FoFA) reforms.
As such he regards the mandatory disclosure of financial licensee ownership as a logical requirement if Australia is going to have a disclosure model that truly reflects client best interests. However he believes that the fundamental conflicted remuneration issue will not be wholly satisfactorily addressed unless the adviser’s Financial Services Guide (FSG), which gives detail of an adviser’s relationship with product manufacturers including fee schedule, is also included on ASIC’s new register.
“Without the FSG we will have an incomplete disclosure platform that may encourage consumers to further their understanding via alternative and easily accessible online resources whose representation of the industry is based on the opinion of peers rather than fact. This is not necessarily the best outcome for the consumer and certainly not for the adviser,” said Mr. Hasib.
According to Mr. Hasib, product commissions do work for the benefit of the consumer as long as the advice provided is transparent, helps the client make an informed choice and provides a product that best fits their needs. However he commends that regardless of how advisers make their remuneration, whether through commission or fee for service, this fact needs to also be made readily available on the industry register.
“If we really do want to restore a fiduciary client relationship within the financial services sector, then let’s do the job properly and thoroughly,” concluded Mr. Hasib.
