Stockbroking advisers give industry woes perspective

Matthew Smith


May 23, 2018

Financial advisers in the stockbroking industry will look to distance themselves from some of the worst sins the royal commission has uncovered when they gather at their national conference in Melbourne today.

Stockbrokers and Financial Advisers Association (SAFAA) chief executive Andrew Green will describe the revelations from the first two rounds of public hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry as “cathartic”, and essential for removing “pockets” of misconduct in the industry, during his address at the conference.

Further, Green will emphasise the imperative for policymakers and regulators not to over-react with unnecessary regulation, which he will argue could add extra cost and push experienced people out of the industry.

In addition to his address, Green will participate in a panel discussion on professional standards and reform.

Australian Securities and Investments Commission commissioner Cathie Armour is also scheduled to speak today at the conference, on the topic of professionalism. In late 2016, Armour tabled a report highlighting some issues relating to the management of conflicts of interest in allocations to capital raisings and transactions within the broking industry. Green will highlight that advisers within the stockbroking industry comply with a raft of public-market rules and have a strong record of delivering advice with minimal complaints.

“Confidence is a precious commodity, so we have to be careful not to dote too much on the webcasts of the royal commission and convince ourselves we need wholesale changes,” Green told Professional Planner in the lead-up to the conference. “My understanding is the vast majority of advisers get out of bed intent on doing the right thing.”

Of the 39,479 complaints to the Financial Ombudsman Service in 2017, 94 related to advisers who were members of the stockbroking industry and eight of those complaints were upheld in favour of the client, Green notes.

Some of the most damning headlines from the royal commission were generated by advisers drawing commissions, while the stockbroking industry has its roots in transactional advice, rather than product sales, he points out.

Green also says asset-based fees enable advisers to have a better alignment with clients than commissions do, although he adds that transparency and disclosure are paramount no matter what fee model advisers use.

There are about 3000 advisers who are members of the SAFAA, Green says. They contribute largely to the roughly 1.5 million trades executed on the Australian Stock Exchange every day, accounting for about $5 billion in daily turnover.



TOPICS:   Andrew Green,  Australian Securitiesand Investments Commission (ASIC),  investment advice,  SAFAA

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