In case you missed it, our friends in the Senate experienced a little bit of drama recently. The on again/off again FoFA laws were switched on again. And the drama then echoed throughout the financial planning industry.
With Jacqui Lambie’s office within shouting distance of our own, the frustrations of our support staff (who had spent countless hours complying with legislation changes and further legislation amendments) could probably be heard in Jacqui’s now Palmer United free office.
A lot of folks are probably wondering what the fuss is about and if they’re better protected than they were before? From the perspective of a privately owned financial adviser group, little changes. All of our clients were already our first priority because we aren’t commissioned salespeople working for bank or financial institution.
The FoFA law changes were essentially aimed at cleaning up the banks and institutions who have offered up scandal after scandal by chasing short term sales targets. Yet these villains who pre-empted the laws through their own behaviour will probably be least affected by them.
Even worse, they will likely benefit. As billion dollar entities they already have the resources to protect themselves and cover the extra compliance burden. Unfortunately, they will likely swallow any smaller independent competitors who find that burden too much – but that won’t be us.
This would lead to the banks and institutions (already comprising 85% of the financial planning industry) to further increase their market share. This result would do nothing to deal with the real problem – conflicts of interest. Vertical integration still means the banks and institutions will put their clients’ money into their own platforms that are conveniently full of their own funds. And they’ll still receive some sort of commission for doing it because how can the bank lose if your money never leaves their financial infrastructure?
Our suggestion would be to just revamp the terminology. If you sell products on behalf of your employer you can be called a financial salesman. If you’re working on behalf of your client, as we are, you can be called a financial adviser.
Simple really.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
