It is timely for the professional community of financial planners to join together and call on the Coalition to take action on a number of policy issues, and on the future direction of the debate around access to advice.
I am always encouraged that our members are so enthusiastic about taking action at a local level and are keen to play a part in shaping the future of their profession. With that in mind,
last month we released a step-by-step guide to our members on how to contact their local MP on a number of issues. These issues include:
• improving and simplifying superannuation for all Australians;
• improving the effectiveness of the Future of Financial Advice (FoFA) reforms;
• making financial advice fees tax-deductible, to help consumers pay for financial advice; and
• strengthening the regulation of financial products, fund managers and research houses.
Fair and sustainable super
I’m positive that most of the professional community of financial planners would agree that we need to simplify, improve and restore fairness for all in the superannuation system by supporting meaningful and effective changes. As I have said many times, the constant tinkering with the system due to budget requirements is damaging for consumer trust and consistency.
For many people, making additional superannuation contributions becomes more critical – and often more affordable – in the final 10 years of full-time work. With this in mind, we have called on the government to increase the concessional contributions cap from its current level of $35,000. This will surely encourage and assist Australians with saving for their retirement.
Our calls to government regarding super are to:
• remove superannuation default funds from the modern awards and theFair Work Act;
• remove superannuation from the budget cycle; and
• increase contributions caps.
Effective regulation
In order to improve the effectiveness of the changes introduced under FoFA, we believe that the following actions need to be taken:
• Remove the two-year client opt-in renewal that is required for financial planners to be able to provide an ongoing service to their clients.
• Make the fee disclosure statement (FDS) requirements apply prospectively only, as originally announced.
• Amend the Corporations Amendment Regulation 2013 (No 5) (grandfathering regulations) to remove the unintended market competition inequities and restriction-of-trade issues.
All of the above would remove unnecessary red tape and would ultimately result in increased consumer protection.
Improving access to advice
To improve the affordability of expert financial advice for those consumers most in need of it, we believe that upfront fees should be tax-deductible. We therefore have encouraged the government to amend the Income Tax Assessment Act 1997 so that:
• section 25.5(2)(e) “tax-related expenses” include advice about a commonwealth law relating to financial product advice; and
• under this same section, the definition of “recognised tax adviser” includes “registered tax (financial) adviser”.
Consumer protection
To increase consumer protection, the Financial Planning Association (FPA) has advocated that the regulation of product manufacturers, fund managers, and research houses be increased in conjunction with appropriate penalties for breaches.
To enable this to happen, we have called for:
• best interests obligations to be imposed on product manufacturers, fund managers and research houses to consider the interests of consumers when developing and assessing financial products;
• a comprehensive system of rating product risk that ensures disclosure of key product risks;
• more detailed disclosure by product manufacturers, including a “suitability” criteria and investment limits to help consumers determine whether the product would suit
their needs and circumstances.
Helping raise the bar
I’m proud of our history of working with FPA members and government to achieve pragmatic policy outcomes that support Australians seeking improved financial outcomes. If the actions outlined in this article are taken, they will help to continually raise the bar on behalf of all Australians and those entrusted to maximise their retirement outcomes. And as a professional organisation, this is our primary objective.
We see a strong opportunity to promote the clear win-win benefit of effective financial planning for all Australians working with the assistance of a Certified Financial Planner (CFP). I strongly believe there is a positive flip-side to building a strong and viable financial planning profession, including long-term systemic benefits to the economy, reduced pressure on the public social security purse, and a population of Australians better enabled to take control of their financial future. This is effectively a double dividend – it is good for consumers and good for the professionals who serve them.
