Financial advisers’ high regulatory burden is the product of a system that wrongly fails to distinguish “high risk” and “low risk” advice, an adviser believes.
Just as the tax system delineates higher risk players with a “high audit” status, so too should financial advice regulators, according to MEDIQ Financial managing director and AFA Rising Star Ravi Agarwal.
“The people who are providing advice 'low audit’ advice, things like making sure they have the right superannuation and insurances and they have a plan and are working towards financial goals shouldn’t have the onus placed on them to prove that they are not double gearing into a property fund,” he told Money Management.
Agarwal believes the failure to separate riskier financial activities from those offered by everyday advisers is damaging client/adviser relationships and the profession’s perception among the wider community.
He said anything involving complex exposure that is difficult to articulate to the client, such as derivatives, should be subject to rigorous regulatory guidelines, but retail advice should be subject to less scrutiny.
