AMP CEO Francisco De Ferrari and IOOF CEO Renato Mota

Getting affordable advice to more Australians could require a rethink of policy settings that govern financial advisers giving personal advice, CEOs of the country’s two largest advice networks separately told a parliamentary economics committee on Tuesday.

“I think we need to find a solution regarding how we get affordable advice to more Australians,” AMP CEO Francisco De Ferrari told the House of Representatives Standing Committee on Economics in response to a question from the Australian Labor Party’s Andrew Leigh on whether there is a “permanent underclass” in Australia given the limited access people have to independent financial advice.

De Ferrari raised some form of scoped advice as a potential solution and the possibility that best interest duty may need to be a reviewed to make advice more accessible.

The issue was also on the mind of IOOF CEO Renato Mota during his time in front of the committee, which was chaired by the Liberal Party’s Tim Wilson. Earlier in the day FASEA’s CEO Stephen Glenfield, along with the FPA and AFA CEOs Dante De Gori and Phil Kewin, appeared and were asked questions by committee members. Later in the day Industry Fund Services CEO Catherine Bowtell had her opportunity to respond to the committee’s questions.

When asked to weigh in on the benefits or otherwise of intra-fund advice by the committee, Mota said he agreed with the intent, even though he noted there may be a lack of clarity around the rules that allow advisers within super funds to provide advice under the supervision of the trustee that’s distinct from personal advice within the Australian Financial Services License system.

“The question is: How do you make advice affordable? One of the reasons [super] funds have looked to build [intra-fund advice offerings] is to provide advice in an affordable manner, so I agree with the intent,” Mota said.

“It would be good to have scaled down advice and have affordable advice but for it to not so much depend on the product – intra-fund advice relates to advice within the product,” Mota commented.

Both Mota and De Ferrari pointed to the affordability of advice among the challenges the advice industry faces in the wake of the Hayne royal commission and the resulting raft of regulatory changes in their opening remarks before the committee.

In addition to affordability of advice the committee quizzed the two CEOs responsible for the two largest remaining vertically integrated wealth businesses in the country on a range of topics including progress of the respective companies’ remediation programs, post royal commission advice compliance and audit standards, superannuation access and liquidity, and fees associated with external funds on proprietary platforms and approved product lists.

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.
3 comments on “IOOF, AMP CEOs raise advice affordability concerns”
  1. There are two very simple solutions:

    1. Disband the shambles that is FASEA
    2. Move to an Opt-Out solution for clients.

    Clients always retain the right to exit our services if they are not satisfied.
    So long as we do not charge a fee for clients to leave.

    Creating a compliance minefield as we have now is just an accident to keep happening over and over again.

    Little wonder experienced advisers keep leaving and minimal new advisers are attracted to this industry.

  2. Avatar Steve Blizard

    One thing is a definite. Implementation of the new Treasury Draft legislation (relating to the Haynes RC) will increase the cost of personal advice even more.

    The question that must be addressed is this: How is it equitable that fund members who are paying salary & BONUSES to intrafund advisers [cross-subsidising advice to other members that they never receive, without providing informed consent, and without providing bi-ennial opt ins], when such remuneration arrangements for retail advisers is illegal?

    If the instos want to keep the outrageous intrafund advice system in place, then Govt bureaucratic red tape impacting retail advisers, such as bi-ennial or annual Opt-Ins, must be removed. ie It should be changed to “Opt-Out”.

    If informed consent is provided within a statement of advice, for an ongoing fee arrangement without ongoing opt-ins (as exists with wholesale investors) then this will be a major step forward in reducing the cost to the average mum & dad investor.

    The fact that this two tier remuneration system now exists is essentially an unjust industrial relations issue for retail advisers, who are leaving the industry in droves – effectively pushing up the cost of advice on an available adviser number demand/supply basis.

  3. Avatar Jeremy Wright

    Affordability has been the catch cry and is valid, due now to the fact that 80+% of Australians can no longer afford to get advice.

    In addition,the fact that nearly all of the big end of town have exited due to the complexity, risk and cost of doing Business, has reached an unviable position, should perhaps be an indication to the Government that the Regulators and the Regulations have overstepped the mark.

    In the Regulators zeal to reach the perfect scenario of more and more complexity, we have had the exact opposite result of the much heralded, “more affordable and clear, concise advice.”

    We now have a maze of impenetrable complexity that no private Business can survive in, if the expectation is for most Australians to be able to attain advice.

    Then to cap it off, there is the fiasco that is called FASEA, which is the epitome of what has gone wrong with the entire Industry.

    When we ask theorists, Lawyers and Regulators to build the framework of a workable platform, it is always going to end with confusion.

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