Phil Anderson
The Association of Financial Advisers (AFA) has prepared a further paper in response to the Banking Royal Commission Final Report, calling out its failure to acknowledge the value of financial advice.
In the paper, AFA General Manager, Policy and Professionalism, Phil Anderson says all advisers should be concerned about the way financial advice has been described and treated in the Banking Royal Commission Final Report. This is illustrated by a number of statements, including the following:
“The [financial advice] industry has moved from scandal to scandal, causing financial harm to clients, and damaging public confidence in the value of financial advice.” The Banking Royal Commission Final Report (the Final Report), page 120.
Phil says, “The Final Report does not acknowledge that there are many good advisers or the benefits that they deliver for their clients. It does not acknowledge the relatively small number of complaints received by ASIC and External Dispute Resolution schemes. There does not seem to be an understanding that adviser remuneration, both upfront and ongoing, must be approved by the client, in writing, otherwise it can’t be paid.”
He also says there is disapproval about the payment of ongoing advice fees from superannuation products and an assertion that if people are not willing to pay for advice from their own hip pocket, that they don’t value that advice.
“The recommendation for annual renewal is based upon a lack of understanding of the value of financial advice and a lack of awareness of client approval mechanisms.”
He also notes that there is disapproval about the sale of financial advice businesses, and that there was no consideration by the Royal Commission of intra-fund advice, despite the inherent risks with conflicts of interest.
Read the paper in full: Royal Commission failed to Understand the Value of Ongoing Financial Advice