ASIC called on to intervene on portfolio reviews

The principal of a Sydney boutique advice firm is calling for regulatory intervention to ensure all clients are provided with mandatory ongoing reviews of their portfolios.

Darren Johns of Align Financial said the firm had recently taken on a number of new (mass affluent) clients who had essentially been let down by a lack of provision in the Corporations Act for ongoing reviews.

A high percentage of these former clients of large, privately-owned dealer groups as well as institutions effectively had a financial adviser in name only and not by relationship, he said.

“In some cases it had been up to four years since they have had a review from their advisers at their previous dealer group or advice firm.”

In addition, Johns said none of these clients had ever had a financial plan drawn up for them, but were instead “only in possession of a collection of policies”.

“This suggests that when the fact-find was done by the previous adviser, they just identified assets they could advise on and invested in them to the best of their abilities,” he said.

“While the documentation provided in relation to the products sold were undoubtedly compliant, the point is the advisers were grossly deficient in not providing a plan.

“Without a plan, without direction, without anything by which to gauge progress, how can you provide meaningful financial advice?”

An Australian Securities and Investments Commission spokesperson confirmed there is “no obligation within the Corporations Act to provide ongoing personal financial product advice and, therefore, it is not a regulatory requirement”.

Count Financial chief financial officer Michael Spurr said all Count clients have to be offered a review, involving a meeting, at least once a year, but beyond that it is negotiated with the client.

“Different clients will have a more in-depth review program where they see clients more often, but certainly every client has to be offered a review.”