General advice an outlet for exam avoiders
With the final Financial Adviser Standards and Ethics Authority (FASEA) exam starting this week, risk advisers could still turn to general advice if they do not want to continue the education requirements, according to Australian Advisory.
Australian Advisory principal, Mark Dorling, said risk advisers needed to be aware there were other options if they did not pass the exam or did not want to do it.
“We’re having a lot of conversations [with advisers] who still didn’t know what they wanted to do, that’s a bit alarming for me,” Dorling said.
“If you’re an old risk writer you don’t need to go through all the education standards and up-skilling you can do general advice.”
Studying and operating a business at the same time while not only doing the exam but also the tertiary requirements could be a big ask for a lot of advisers, which meant this could be an attractive option for those that did not want to study.
“An adviser studying is not making money for the business,” Dorling said.
“If you’ve passed the FASEA exam and you want to go through, a full advice adviser can still do general advice for clients that don’t require the hand-holding.
“Or, if you’re a general advice adviser and you have a client that you know needs more then you can refer that to a full advice adviser.”
Dorling said the restrictions to general advice were outlined in the Australian Securities and Investments Commission (ASIC) regulatory guide 244.
“There’s three major things we can’t do with a client under general advice: we can’t offer a personal opinion, we can’t give a recommendation, and we can’t take personal circumstances into account,” Dorling said.
“We can only give statement of facts, which is like something in the adviser guide or a product disclosure statement from product providers.
“We can’t look at assets, liabilities, dreams, aspirations and things that; we don’t have SOAs [statements of advice], the client just tells us what level of cover they want.”
Dorling said the advantage of general advice meant not committing the time to doing a full SOA for clients who only needed their options explained to them so they could make their own decision.
“You could be spending 10 to 20 hours doing an SOA, doing it properly, and present it to the client and they say they don’t want that much cover,” Dorling said.
“They knew what they wanted anyway, so they’ve gone through 10 to 20 hours research for something the client knew they wanted in the first place.
“General advice is simply giving the client enough information to make their own informed decision.”
AUTHOR
Chris Dastoor
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