Need for fee transparency on scaled advice
The Australian Securities and Investments Commission (ASIC) has agreed there must be transparency around the fee structures applying to scaled advice and appropriate controls around remuneration to avoid conflicts of interest.
The regulator's views were made clear during official responses to questions posed by the Opposition spokesman on Financial Services, Senator Mathias Cormann, during Senate Estimates Committee hearings. Cormann had previously expressed concern about the manner in which industry super funds might deliver scaled advice.
ASIC senior executive leader John Price said the regulator supported scaled advice, referencing a report issued by ASIC last December which held that the majority of Australians do not necessarily want a full financial plan.
"Typically, a majority of Australians who want financial advice are keen to get advice on specific things relevant to their financial circumstances, and that, in essence, is scaled advice," he said.
"So scaled advice, in essence, is relatively constrained advice about particular items rather than what has been termed holistic advice, which is a full, comprehensive financial plan about everything to do with someone's finances. So an example of scaled financial advice might be the simple question, 'Should I contribute more to superannuation or should I pay off my mortgage faster?'"
However Price declined to give his opinion on who should pay the fees for scaled advice beyond saying he believed there should be transparency around fees and "appropriate controls around remuneration arrangements that might lead to conflicts in the provision of the advice".
AUTHOR
Mike Taylor
Recommended for you
A former Northern Territory financial adviser has received a seven-year ban from ASIC, having been convicted of supplying dangerous drugs and receiving or possessing the proceeds of their sale.
Both Bain Capital and CC Capital have made revised bids for Insignia Financial after completing a period of due diligence.
The advice industry has reached triple-digit gains for the calendar year to date, with two licensees seeing gains of five during the week.
Targeting market leadership in digital advice, Bravura’s digital solutions are now available to over 6 million superannuation fund members.
