Sharing his reasoning in joining the Financial Services Council (FSC) board, WT Financial chief executive, Keith Cullen, believes “product and advice cannot be separated” from each other.
It was announced earlier this week that Cullen and fellow licensee head of Fortnum Private Wealth, Neil Younger, would be joining the board. In addition, several other advice licensees including Count and Infocus joined as FSC members.
The FSC said this decision has been taken in order to deepen its engagement, strengthen advocacy on advice issues and have a unified voice on regulatory and policy issues.
However, questions were raised given the organisation’s historic focus on product providers – those fund management and superannuation funds.
Cullen said he decided to join the board, having been approached by the FSC, to have a voice in the upcoming Quality of Advice Review legislation.
He also noted much of financial advice in the past was tied to advice provided by AMP or the big four banks which was no longer the case following the Hayne royal commission. AMP chief executive Alexis George also joined the FSC board last September.
He said: “You can’t separate product and advice in Australia, you just can’t, so we saw an opportunity here from a legislative perspective.
“We felt it was important to have a united voice at the table when legislation is received and to have the right voices to consider the best outcome. This legislation is very important for the profession.”
Commenting on the additional licensees who have also joined, he said they had discussed the potential membership with each other beforehand.
“We all know each other well and have advocated together in the past and communicate with each other often. It felt appropriate to join.”
His primary focus – for the time being – as a licensee representative will be the implementation of Quality of Advice legislation and ensuring the eventual legislation meets the needs of the industry.
In line with concerns of the FAAA and FSC, Cullen said WT Financial is unhappy with the changes to requirements for super trustees mentioned in the first tranche of legislation. This sets out a number of requirements that need to be satisfied before a trustee can charge the cost of advice against the member’s interest in the fund.
Among the requirements is an assurance of an unspecified kind that the financial product advice is personal advice and is wholly or partly about the member’s interest in the fund, and that the amount charged does not exceed the cost of providing financial product advice about the member’s interest in the fund.
The legislation also outlines that a trustee is not required to agree to the member’s request to charge the relevant costs even when the requirements are satisfied.
Cullen said: “We have a plate full with the legislative agenda at the moment already; we are working through the next round right now, and we want to ensure it is reflective of the objective that was set out.
“[The super changes] is a serious deficiency that needs to be resolved; that’s our most critical focus as it is completely unworkable. WT have made our views very clear to the government already and believe the issues need to be dealt with. I wouldn’t like to see it passed in its current format.
“They can still work on the other parts of the legislation, but they really need to get this part right first as it is completely confusing in its current format.”
Must agree to disagree with you on this one Keith, with the Banks/Institutions largely out of advice now is the time to allow them to have internal staff trained to give product information about their own products and stay away from the independent advice sector. Why? Recent history demonstrates they are very poor at it and their high cost, poorly performing funds are a disgrace. We all must remember that consumers are the true victims of vertical integration and they are the ones we are meant to acting bin the best interests of.