Providing simple advice simply will reduce cost
Financial advisers need to be able to provide simple advice simply to reduce the cost of personal advice, according to The Advisers Association (TAA).
In its submission to the corporate regulator’s consultation on ‘Promoting access to affordable advice for customers’, TAA said the fact that the Australian Securities and Investments Commission (ASIC) had already provided temporary relief for financial advice related to COVID-19 demonstrated that simplification was possible.
However, it said, the changes put advises on an uneven playing field compared to other providers such as intrafund advice and accountants as advisers needed to meet all advice requirements including best interest and safe harbour obligations for new clients.
“It is important for there to be a level playing field for advice, so if a client wants to see a financial adviser for the same advice about their super, the adviser should be subject to the same rules and disclosure requirements as if the advice was provided by a super fund through intrafund advice,” TAA said.
“Our preference is to remove the term ‘general advice’ and rename intrafund advice and robo-advice as intrafund information and robo information. This would remove any client confusion that they are receiving advice, when what they are typically receiving is information about a product. When FSR was being introduced ‘Financial Product Information’ was proposed, which is a more accurate description than advice.
“We believe that within the current regulatory environment there are opportunities for ASIC to make changes, which will make it easier for everyday Australians to access limited advice, similar to intrafund in a compliant, cost-effective and quality manner.”
TAA also said the limited advice framework could be improved by matching advice risk and complexity to the level of advice documentation and process requirements for simple, rather than complex limited advice scenarios. Examples included cashflow, superannuation contributions, super investment options and switching, insurance in super, consolidation of super accounts, and investment in managed funds and exchange traded funds.
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