FOFA compliance requires more staff
The Future of Financial Advice (FOFA) reforms have led firms like Bull Financial Group to employ additional staff but the costs do not correspond with the benefits, according to its principal, Leanne Bull.
The Chartered Financial Planning authorised representative had to employ an additional staff member around 10 months ago who could focus on complying with FOFA regulations such as sending fee disclosure statements to its 380 clients, and prepare opt-in statements for 50 clients.
However, Bull argued that the additional paperwork was not leading to additional awareness around fees among clients that was not already in existence.
"The reality is that to be doing things that they don't value just because somebody thinks that it's important. I mean people should have the right to decide whether they really want to have the fees [explained to them] in four different methods instead of three," Bull said.
"I'm very much a big believer that people need to make informed decisions and I spend a lot of time with clients explaining to them what the advantages and disadvantages of each of the options are and how things work and so forth. But if they don't read the three, is it really going to help them get a fourth method?"
Bull said her firm had dialled commissions down to zero and only charged fees, whereas other firms still took trail commissions and did not have to engage in additional disclosure.
"I haven't had one client complain about the fees. We get responses back from people saying, ‘look, it's not necessary to give this information', and we say, ‘well it is. It's a legislative requirement'. Well, clients are saying, can't we opt out of opt-in?"
"For something that clients don't care about, any time I do get feedback; most people don't even respond to it nor do anything. I do get upset that I'm wasting a lot of resources doing things that clients aren't interested in," Bull said.
AUTHOR
Malavika Santhebennur
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