Admin preventing transfer of funds
Financial planners are being stymied by anti-money laundering laws and the onerous administration tasks involved in transferring client funds from one term deposit to another, according to Curve Securities managing director Andrew Murray.
Murray said that although equities had picked up and some money had moved out of fixed interest, there was still a lot sitting in cash earning minimal interest as rates came down.
"There remains a wall of money still invested in interest-based products," Murray said.
"Where advisers find it difficult is because the administration and anti-money laundering legislation make the movement of money between one term deposit and another very difficult."
Although mortgages and loans had received quite a bit of attention from government legislation, there was no attempt to standardise bank processes, with some application papers stretching out to 16 pages.
For advisers with many clients, this presented an enormous amount of paperwork.
"The term deposit, fixed interest world is incredibly archaic and paperwork-heavy as opposed to the ASX where you just sell a share and buy a new one," he said.
"The end result is the client's funds end up sitting in a low interest earning account of around 3 per cent or even 2.5 per cent, when it should be working a lot harder for them by accessing different specials and finding out which banks are looking for money on any particular day."
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