Super switching advice becoming harder to get
The stringent rules governing superannuation switching advice has meant some financial planners are eliminating this type of service for their client base.
Speaking at the recent Money Management/Fidelity Investments Round Table for financial planners, IFA Securities general manager Ron Ogilvie said: “We’ve stopped doing it. Our guys won’t advise on the smaller cases under $30,000 or $40,000, particularly if it is coming from an industry member, because you just can’t afford to do it.
“It is so hard to get the information on the other side of the fence to meet what the ASIC [Australian Securities and Investments Commission] rules are,” he added.
Planners cited the regulator’s insistence of looking at form rather than the substance of the advice as being the major stumbling block.
“The perception would be that ASIC don’t have a clue about strategy. They don’t look at strategic advice, they’re looking at product … [They only focus on] ‘is it the right product’, but they don’t actually understand the ‘why it might not be’, or the ‘why it is’, or ‘what led to the product’. Strategy doesn’t seem to play a part at all,” Berry Financial Services principal Julie Berry said.
The situation has been further clouded by how protective the industry funds are about retaining existing members.
“We’re also aware that at least one industry fund now, as a matter of policy every time a client moves, writes to ASIC to say we do not believe the advice was appropriate. Then ASIC can just follow it up,” Ogilvie said.
If the trend continued the advisers felt fund members looking to consolidate small balances across a range of funds may not be able to receive any financial advice at all.
“Who will give those people advice if it gets to be too hard for everybody? People come in with $200 in this fund and $17.50 in that one and somebody has to be able to provide them with advice,” Berry said.
She suggested in the current environment this type of service may soon only be provided by banks, as they were organisations that could afford to give low cost advice.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
