Assistant Treasurer and Financial Services Minister Arthur Sinodinos will review the Association of Independently-Owned Financial Professionals’ Christmas wish list, which was presented to him at the first meeting of the group’s Consultative Committee early this month.
The committee, which is chaired by AIOFP director Peter Johnston, met with Sinodinos at the AIOFP national conference in Hobart on November 7.
It included Beacon Financial Group chief executive Peter Daly; Capstone managing director Grant O’Riley; business analyst at Lifespan Financial Planning Eugene Ardino; Synchron director Don Trapnell; Wealthsure managing director David Newman; senior tax consultant at Utopia Financial Services Clive Ross and Risk & Investment Advisors Australia managing director Grant Scalmer.
On top of the committee’s list is the reclassification of administration platforms as administration service providers not investment products. That would allow independently-owned financial planning businesses to continue accepting volume rebates after the grandfathering provisions end.
Johnston said the objective and intent of the Future of Financial Advice reforms was to get advisers to charge clients a direct fee for service, and end all third party commissions and subsidises which had the potential to cause conflicts of interest and compromise advice.
However, institutionally-owned licensees were able to subsidise dealer fees and run at a loss in order to collect profits in other parts of the business such as administration and funds management, he said.
“The independents must compete against the cross-subsidised vertically-integrated and SMSF models,” Johnston said.
“Over 85 per cent of the advice market is permitted to internally cross subsidise their advice practices with platform profits but the independents are not permitted to take an administration profit share to subsidise their practice. The easiest way to end this discrimination is to instruct ASIC that administration platforms are not investment products.”
The AIOFP presented Sinodinos with five key requests in total, calling on the minister to force institutionally-aligned advisers to be more transparent about their relationship by printing the logo and name of their licensee, and their licensee’s parent, on company business cards, letterheads, websites and marketing material.
It also urged Sinodinos to address a recent dispute between two AIOFP member firms and the Victorian State Government, whereby the state was trying to collect payroll tax on contractor’s revenue that the dealer groups collected and paid to their self-employed advisory network.
Johnston said payroll tax of around 5-6 per cent was being applied to fees collected by the dealer groups and passed onto advisers.
The AIOFP Consultative Committee will hold its second meeting in early December.
