Planners exposed by platform requirements
Financial planners who make recommendations to clients on the use of platforms may be inadvertently exposing themselves to breaching Australian Securities and Investments Commission (ASIC) guidance if they do not provide accurate information about the basis of their recommendation.
However the catch for the planners is that the platforms themselves are likely to be the only accurate source of the information required by ASIC Regulatory Guide 148 (RG 148) and a number of planners have told Money Management the platforms have not yet provided that information in easily usable form.
The issue was first raised during last year's Money Management Platforms and Wraps conference as being problematic for planners and their dealer groups, and a number of senior industry officials have warned that a number of platform providers have still not delivered the information required by planners.
RG 148 makes clear that platforms are a financial product and that, therefore, "opinions or recommendations intended to influence, or that could reasonably be regarded as intended to influence, a decision about using a platform will be financial product advice".
The regulatory guide then goes on to state that advisers providing opinions or recommendations with respect to platforms will need to meet their best interests duty and that ASIC expects that "advice given about platforms and investing through them will cover the key features of a platform, including how it is different from investing directly in the same financial products and/or securities, and the impact of matters listed in the consumer warning acknowledgement, requiring acknowledgement (or agreement in the case of electronic submission) by the client".
"We consider that advice about platforms and investing through them can be scaled. When providing advice on subject matter such as investing through platforms, it should be made clear in the Statement of Advice (SOA) what advice has been provided and what advice has not been provided (as relevant to the subject matter of the advice), the implications of this, and why that approach was taken. This is especially important in the context of determining whether a platform is an appropriate option for the client," the ASIC guide states.
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.
