Rice Warner clarifies $11 opt-in cost
Rice Warner has responded to criticism from segments of the financial planning industry over its findings that opt-in would cost $11 per client with a clarification over how it arrived at the figure.
One of the criticisms levelled at the study is that it assumes opt-in will take place in the course of regular client meetings and will not require advisers to chase clients up separately, given that roughly four out of five clients are currently classified as 'inactive'.
But Rice Warner said with grandfathering provisions, opt-in will only apply to new clients, meaning that advisers who adapt their business models to include annual or biennial client reviews for all new clients will be able to incorporate 'opt-in' processes as part of their normal client management.
The cost was also calculated as the additional cost over and above what it would cost to implement key functions that would be required under an 'opt-out' regime, given these would have been required regardless of whether opt-in was adopted, Rice Warner stated.
The cost of opt-in should also not be confused with the implementation and ongoing costs of other FOFA reforms, Rice Warner stated.
Another criticism was the fact the study accounted only for advisers within the top 100 dealer groups. Rice Warner referenced a Money Management analysis to highlight that no more than 2-3 per cent of authorised representatives fall outside the top 100 groups.
Noting that many practices within the top 100 dealer groups are small practices with a small number of authorised representatives, Rice Warner stated: we can only conclude that those who talk about significant numbers of small dealer groups are in fact talking about small advice practices - and most of these operate through larger dealer groups."
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