FASEA board member and executive director of The Ethics Centre, Dr Simon Longstaff, has taken aim at representative associations serving to protect the status quo, warning that the financial advice industry risks being overlooked in the future for statutory funding models along the lines of Medicare and legal-aid.

“There is a test playing out almost every day for those who are in this emerging profession and for those who represent them and it goes to the heart of what the Code of Ethics is trying to address,” Longstaff told Professional Planner during an interview as part of its Ethics for Advisers podcast series which can be listened to here. Longstaff added during the interview that his views were his own and should not be taken to represent the views of the FASEA board.

This test, Longstaff elaborated, relates to the idea of whether people in the industry working for clients are able to subordinate self-interest for the greater public good or the good of others.

Despite the challenges that come with adapting to policy and regulatory changes following the Hayne royal commission recommendations and the ensuing industry upheaval, Longstaff said he is aware of “plenty of people” who are embracing fundamental ethical change and are standing aside from their associations, which tend to represent the interests of a broader group.

Associations that represent people not prepared to forgo commissions or raise education standards “just don’t get it,” Longstaff remarked, while raising that a statutory fund designed to subsidise face-to-face advice which he described as a real possibility some time in the future.

“[O]nce this occupational group becomes a real profession, they could go to a government and say ‘now we have made that move, why not recognise the good we have made to society as a whole is equivalent to lawyers and doctors… and why don’t we introduce something like legal-aid or Medicare’: a statutory fund available to every financial adviser to make application to if they provide face-to-face financial advice to people of only modest means,” he described.

While a fund of this nature might not be an immediate prospect, according to Longstaff, the opportunity for the industry now is to transform the contribution it makes to society, “not just take this as something done to a group of people by a government that made this decision some time ago and then try to wind it back quietly here or there.”

Rather than be taxpayer funded, financial advice-aid could be funded with a very small percentage of the fees charged by funds managers progressively contributed to a government designated fund to which application could be made by advisers providing financial advice to average Australians.

“I imagine a world if this group could make the transition in good spirit, where you have a mixed practice with high net worth individuals providing fees to the business, and on top of that you are getting a decent and consistent salary to provide face-to-face financial advice to those who really need it across the Australian society.

“That has to be a marvellous prospect, but do you see people talking up that prospect?” Longstaff asked. “No, mostly what you hear are the voices of the discontented, and I think that’s such a shame because there is so much more to be won for the good of this society and for those who perform in this profession if only they embraced it,” he said

“Look at the financial requirements for Australians, particularly in the uncertain future emerging now because of the changing patterns of work – every Australian needs to be able to have good face-to-face-advice.”

Smith is the editor of Professional Planner’s print and digital platforms. He is an experienced financial journalist, editor and multimedia producer who has held senior editorial positions both in mainstream press and trade media.
4 comments on “Statutory fund for advice within reach: Longstaff”
  1. Avatar Chris Craggs

    I can’t believe that the solution is “a very small percentage of the fees charged by funds managers”. We just spent years getting rid of product based commissions and now you want to reintroduce them?

    And the logic “Rather than be taxpayer funded” is so unethical in its positioning. Any payment that is given to a government that is not earned is a tax, paid by taxpayers (call them fund managers if you want, but its the client that has their returns cut to pay for this). This “small percentage” is nothing more than an additional tax, paid by investors, so that others in the community may get free services. The truth of it is that wealthy clients will go to wholesale funds, escape the additional cost, so that middle income mums and dads are left picking up the tab for low income families.

  2. Avatar Jeremy Wright

    This is the dilemma that all Australians face, where people who may have an idealistic perspective, that is destructive to the overall good of all Australians, are given a voice and an opportunity to put into place, their Utopian world that lays within their fantastical theoretical minds.

    I have rarely read so much tripe, that Simon Longstaff has spouted and what he has proven, is what we have been saying since FASEA was set up, in that they are so far removed from the real world, they should be placed on train and deposited into the desert, where they can sit around a camp fire, earnestly agreeing with each other of their virtuous rubbish and leave the real world of employing Australians and providing real advice in an unforgiving world, that can do without the likes of the fantasist Doctor Simon Longstaff and his cronies.
    FASEA, with their myopic and absurd agenda, are the major reason why the advised retail Life Insurance Industry is heading into collapse and the Government, with their child like belief system of thinking if a Lawyer or former judge states something, then it must be right, are being led down the road to perdition for millions of Australians who will no longer have trusted advisers to guide them and lead them away from decisions that are detrimental to them and their families.
    Tens of thousands of advisers and their staff are being thrown onto the scrap heap, because of and due to, an insane Regulatory world that is causing untold damage, with no determinable benefit, based on fact.
    Instead, we have allowed the lunatics to run the Asylum and look where we are heading, straight off the cliff.

  3. There’s a simple rule in life “What people don’t pay for , they don’t value” Is there any evidence that there’s a pool of people out there who, but for their straitened circumstances, would be banging down the doors of planners? And, if they have no money, is there any evidence that an adviser would be better placed to help them compared to, say, Centrelink?

  4. Avatar Steve Blizard

    There seems to be no shortage of salaried employees (who don’t have to worry about paying the salaries or overheads of a financial planning practice) offering advice about how advisers & their clients choose to conduct their business affairs. Plus the taxpayer is funding “free” advice now, via the Financial Information Service at Centrelink. There is no shortage of people out there who want advice for free, even despite the fact they have ample super funds to pay for it. The real issue that needs addressing is getting rid of all of the ridiculous levels of Fed Govt imposed red tape impacting advisers, that is pushing UP the cost of financial advice. Sooner or late the consumer will realise all of this “consumer protection” is costing them a packet. We are busy educating our clients who is causing this cost escalation, and that they should complain to their local MP that they want LESS regulation, not more. They would be better off “opting out” of this “protection” & enjoy the world of wholesale investors who are fortunate enough to escape all of this pointless regulatory cost.

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