Opt-in would magnify market dangers - Rantall
The market volatility of recent weeks has provided a prime reason why 'opt-in' represents bad policy with significant unintended consequences, according to Financial Planning Association (FPA) chief executive, Mark Rantall.
At the same time, Rantall has challenged claims by the Australian Securities and Investments Commission that a failure to implement opt-in might result in consumers paying for advice they don't receive because of asset based fees.
He said such claims by the regulator - contained in an answer to a Parliamentary question - were "nonsense".
The FPA chief executive made it clear that the close relationships which existed between planners and their clients were vital at times of market extremes, such as during the Global Financial Crisis and in recent days.
Rantall said it was the ongoing relationship between financial planners and their clients that enabled planners to act immediately in such circumstances and to provide advice and reassure clients, enabling them to make rational decisions.
"The proposed opt-in requirement could put at risk planners' ability to provide a critical response during crisis situations and market uncertainty," he said.
Rantall said clients should be given an annual opportunity to opt out of their relationship with their planner, but there were too many consequences associated with opt-in, including inadvertent exposure to investment risks such as superannuation contribution cap breaches and unmanaged investments.
AUTHOR
Mike Taylor
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
