The Financial Advice Association is open to embracing qualified advisers as members but has held off committing to doing so until it knows what guardrails are in place.
Wanting to avoid class warfare between the two tiers of advisers, FAAA chief executive officer Sarah Abood told the association’s roadshow in Sydney that its advocacy is still squarely focused on professional advisers and their clients, but could still potentially include qualified advisers.
“I’ve got a group of members that say we should be having these people as members because we should be ensuring they’re getting the support, they’re getting the connection to the community, they’re getting the incentive to becoming a financial adviser over time,” Abood said.
“I can see that argument, but I don’t want muddy waters right now. Right now, we’re advocating for professional financial advisers.”
The government announced super funds would be permitted to play an expanded role in financial advice when it outlined its response to the Quality of Advice Review last June.
Early criticism of the reform focused on whether there would be appropriate guardrails in place, since no further detail provided by the government at the time.
Minister for Financial Services Stephen Jones announced at a Canberra press conference last December this new class of individuals would be prohibited from charging fees for service or receiving commissions and will most likely be employees of major financial institutions, as well as financial advice firms.
While the boundaries for this advice seemed limited, further criticism was piled on for the decision to label them “qualified advisers” and the potential consumer confusion about what is essentially an adviser who can give only restricted advice – and who in fact holds lower qualifications than a professional adviser.
The minister indicated in January at the Investment Magazine Chair Forum the name will change, but has yet to announce an alternative.
Abood said when the association can review legislation it will re-engage with members on a clearer policy stance on whether this new class of advisers can be included in the association’s membership ranks.
“I don’t think we could admit this new class of advisers as members without consulting with our current members,” Abood said.
“That’s the key point I want you to remember. We’re advocating right now for professional financial advisers. We don’t know what the timing of this is going to be.”
Abood said the government has indicated draft legislation on qualified advisers will be due around mid-year.
“And we’re hopeful that’s the case,” Abood said. “What happens then, we don’t know.”
Abood also raised concerns about potential controversy over the bill, saying it could risk de-railing reforms.
“The danger is that if we have a lot of controversy, if there’s a lot of noise in the media and so on, there’s a danger that the government will not pursue this particular package,” Abood said.
“We think [the reforms are] important, assuming the issue we have with this new class of adviser we have is solved. We’d like to think there’s legislation passed in the current term of government because we know there’s going to be a federal election.”
