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
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