Eugene Ardino

Lifespan Financial Planning, one of Australia’s largest privately-owned financial advice networks, has welcomed key aspects of Michelle Levy’s Quality of Advice Review recommendations, and her bold approach, but says deeper scrutiny of proposed changes is needed.

Lifespan CEO Eugene Ardino said recommendations to significantly reduce regulatory complexity and duplication in the advice industry were positives, as were moves to improve access to personal advice for consumers.

“Under the QAR recommendations, anyone, including employees of banks, super funds and product providers who currently provides general advice to existing clients, would be deemed to be providing personal advice and so would be subject to a higher standard having to satisfy a ‘good advice’ test and show that the advice was fit for purpose and relevant to the client’s needs.”

“However, the risk and possible downside is that there will be scope for unqualified people to give personal advice. We’ll need to work through as to what standards and restrictions would apply to those who are not Relevant Providers and are able to provide personal advice under QAR recommendations,” he said.

Mr Ardino praised Ms Levy’s willingness to address some of the obstacles to advice delivery and problems with regulation head on.

“To make advice more accessible and affordable our compliance framework needs to be simpler. To achieve this there needs to be some radical changes – not just tinkering around the edges – and her proposals do just that. The question is, will those changes have the desired affect and what undesirable unintended consequences may they produce?”

“As government has already indicated there will be more consultation with stakeholders. We expect to see a great deal of lobbying from all stakeholder sectors as government grapples with the proposals and tries to work out what, how and when to implement.”

“The advice industry needs to really get its head around what is recommended, which is fundamental changes to cornerstone regulations. The industry needs to look at these from different and new angles with an open mind and while it may need time to do this it should be attended to as a priority.”

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Tony Mantineo

Increasing regulation of financial services has seen a trend of businesses seeking to become self-licensed through getting their own Australian Financial Services licence (AFSL). While speculation that ASIC may impose individual licensing remains just that, the number of registered advisers that hold their own AFSL or operate a boutique or small AFSL doubled from 2016-2020 to 30%^[1], and a further one in 10 advisers are considering becoming self-licenced.

So why undertake a detailed process that needs time, commitment, and dedication? It is because large institutions experiencing over-compliance burdens are tired of being told what to do and want more autonomy over their businesses. Similarly, smaller dealer groups want to retain control and flexibility over their destiny.

What do firms need to know to prepare themselves?

We are currently working with a number of businesses looking at getting their own AFSL and who are using our services to support them in that process. It can be a big effort to get your own AFSL and it has become harder in recent years.

The first consideration is time. We find it can take between three to six months depending on the parties involved in completing the application process. Decisions need to be taken around who should be nominated as the Responsible Manager as their knowledge, skills, and experience are important. Articulating the manager’s character and how they are qualified with the right know-how can be a big stumbling block. While understanding the five Options that are available to a perspective Manager to demonstrate their knowledge and skills to ASIC, it’s also important to show you have the right infrastructure and that you have time to run an AFSL.Business owners must consider the AFSL process holistically, as getting the licence is just the start.  Adhering to an AFSL is a lot of work. Some of the tasks involve putting together a compliance manual, a compliance committee meeting process, agendas, and policy documents for training and supervision, research, and pre-vet procedures, among other things.

Dealer codes need to be set up at the licensee level and distribution agreements obtained for different providers. An ASIC-approved accountant is needed for a financial audit. The ASIC register has to be updated in terms of appointing new Authorised Representatives.  Then there’s AFCA membership and AUSTRAC requirements.

Once an AFSL is in place, you need the right systems and processes to ensure the smooth operation of the licence and that the advice business does not suffer from meeting the necessary compliance and regulatory demands.

That could mean you need to develop a business plan at a licensee level and a company level and do a cost analysis, including the time you spend as a Responsible Manager and the capability of your personnel. There are significant challenges.

Some businesses are merging or aligning themselves to share costs and responsibilities. If you take that path, ensure that the businesses are truly aligned and that there’s a trust factor between both parties.

How should firms plan?

You need the right infrastructure, personnel, systems, and processes. Unfortunately, many firms focus on just getting their AFSL and don’t have the time to do their own wider research. This can lead to rushed decision making and you could end up paying for support that doesn’t meet your needs.

You should explore dealer service options to obtain the packages and support appropriate for your individual needs. Try to really understand what sits behind the service offering. Look at their packages, compliance support, and personnel. Are they a publicly listed company, or privately owned?

Tap into the experience of Lifespan

Tapping the experience of an organisation such as Lifespan Partnership can be invaluable, as we can keep you up to date on regulatory changes and provide everything needed to run a compliant and successful AFSL. As we’re privately owned, our focus is the AFSL, its clients, and the advisers. We can also share learnings from running our own business and have a dedicated compliance manager who ran his own advisory business and who can provide a unique ‘adviser to AFSL’ perspective.

We leverage our financial planning experience to provide scale and support around technology, pricing, compliance research, and technical support. That includes a comprehensive checklist and induction training to help licensees after their AFSL application is granted. Professional development days ensure you don’t get lonely when you’re not part of a dealer group as you can share information with other AFSLs and become part of that community.

One of the major challenges of self-licensees is obtaining reasonably priced Professional Indemnity (PI) insurance, with the withdrawal of insurers from the market making this more difficult. It can also be difficult to secure reasonable excess terms where a claim needs to be made.   Relationships with general insurance brokers that specialise in PI cover is critical. Our industry experience means we can leverage general insurance broker contacts that we have known for decades, allowing us to assist our AFSLs with appropriate PI cover at competitive rates. Similarly, we provide support with software and pricing and can leverage our relationships with research houses.

The additional value of connecting with a leading AFSL service partner is the peace of mind that comes from having another pair of eyes reviewing your documentation, such as your FSGs, SOAs, compliance manuals, and policy documents., providing you tailored insights and guidance, which takes all of the guesswork, and overwhelming corporate governance pressure, enabling you ensure that your practice and the licensee continues to thrive and operate sustainably well into the future.

By Tony Mantineo, Head of Lifespan Partnership

———

Notes:
[1] Investment Trends.

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Eugene Ardino

Lifespan Financial Planning, one of Australia’s largest privately-owned financial advice networks, has launched a digital investing solution to support the mass market of Australians priced out of receiving holistic personal advice from a financial planner.

Consumers who sign up for Lifespan Invest, as the solution is called, have their investment portfolio professionally managed for them by Lifespan and obtain access to a regular feed of financial literacy and educational content in the form of engaging articles and videos, helping them to lead more successful and fulfilling financial lives.

Lifespan Financial Planning is a leading community of professional, client-focused financial advisers, and was awarded both the IFA Excellence Awards, Dealer Group of the Year, and the Core Data Licensee of the Year award in 2021. Lifespan licenses approximately 260 experienced financial planners across Australia.

CEO Eugene Ardino said the company was proud to be taking proactive steps via a digital solution to seek to address the needs of Australians who would like professional assistance at a level below personal advice.

“In an ideal world, every Australian would be able to afford a personal financial adviser, however, the reality is that delivering personal advice has become increasingly expensive over recent years, inevitably excluding more and more people. Yes, the Government can take steps to reduce much of this cost by streamlining regulatory requirements – and we are extremely supportive of the Quality of Advice Review currently underway – however, the industry needs to also use robust and compliant new technologies to help address the growing “advice gap.

“Our advisers are now able to offer an alternative digital solution for those whose circumstances are such that they do not need to go through the more expensive personal advice process. When they do need that service, our advisers will be there for them”, Mr Ardino added.

The problem – and its solution

Mr Ardino called on the rest of the financial advice industry to look to new technologies to enable them to reach and help mainstream Australia.

“The press is doing a great job in highlighting the size of the problem – thousands of advisers continue to exit the industry every year, and as a result, it is estimated another 100,000 Australians over the past year were “orphaned”, that is, had their adviser relationship terminated. The problem is clear – but equally, there are now digital solutions to this problem, and it’s up to the industry to embrace these new technologies,” he said

The Lifespan Invest solution is provided via a partnership with Melbourne-based fintech platform, OpenInvest. OpenInvest CEO and co-founder Andrew Varlamos said the company was excited to be partnering with an award-winning dealer group in Lifespan Financial Planning.

“The team at Lifespan understand that everyone is better off when they can access expert and professional help and are now – via OpenInvest technology – able to reach a much larger audience with their expertise. The current advice gap will only be solved by a combination of scalable technology and progressive financial advice firms such as Lifespan working in partnership,” Mr Varlamos said.

Financial wellbeing

Mr Ardino echoed the theme that being able to access trusted financial expertise helps people to lead more successful and happier lives.

“For a variety of reasons, increasing numbers of people are experiencing financial stress and uncertainty. And because the banks have all exited financial advice – unless you’re extremely wealthy – it leaves an even larger vacuum that unfortunately has been filled with a spate of gimmicky trading apps that encourage people, especially young people, to gamble via share trading or crypto. Not only does this pose excessive risk of financial loss, but it also comes with inevitable mental anxiety and stress.

“There’s sensible investing and there’s speculating, and we see it as our role to help Australians invest the right way – via managed, multi-asset class diversified portfolios. By doing so, they are more likely to reach their financial goals and also achieve a greater sense of financial self-confidence and wellbeing,” Mr Ardino said.

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Eugene Ardino

Dear Anthony and Scott,

With the Federal Election rapidly approaching, I felt compelled to put pen to paper to highlight the issues that continue to plague the financial services community.

This upcoming election is looking like a tight race, and whoever assumes power on May 21 will significantly influence the financial services sector, and every Australian’s opportunity to access to quality financial advice for years to come.

The financial advice community has been decimated over the past few years, with only 15,000 financial advisers expected to be practicing by the close of 2022, from a peak of almost 30,000^[1]. Australians are abandoning advice and advisers are being forced to cut ties with clients who cannot afford to pay significant fees, with over 100,000 less receiving financial advice than 12 months ago^[2]. According to Adviser Ratings, most of those people no longer receiving advice, are aged 35-54 years, and it is going to be a major challenge to reintroduce the value of advice down the track to this segment.

We are at a critical crossroad, with an aging population, and the “Great Australian Wealth Transfer” on our doorstep, or potentially already here. Access to quality financial advice has never been so important, however, if we do not seek significant change, many will not be able to access affordable advice from a professional financial adviser.

Government has not recognised the advice community as the profession that it has now become, and therefore not provided the trust that our profession deserves, after years of jumping through hoops and navigating constantly shifting regulatory goalposts.

Here are four key issues that I believe need to be addressed by the incoming government.

1. Legislative certainty and stability

We need a measured, long-term view when it comes to financial advice regulation. Ongoing change and upheaval has left licensees, and advisers battered and bruised. We need the space to breathe and embed existing compliance requirements. We need the opportunity to consolidate and support advisers to build sustainable advice businesses so that they can continue to deliver quality financial advice for many years to come. In practice, this means a commitment to not increase compliance requirements for some time and where appropriate, to reduce some of these compliance requirements. This is not only important to existing advisers but is critical in attracting new entrants. There are currently low numbers of entrants into the advice profession, and we need to work on making a career in financial planning more desirable, as adviser numbers will continue to decline over the coming years. To achieve this, we desperately need to demonstrate stability.

2. Address the fundamental issues affecting advice affordability

Currently, there exists a clear disconnect between the cost of providing one-off advice or advice to new clients, and the price consumers pay for that advice. The sheer amount of disclosure and record keeping documentation required is overwhelming and a major administrative burden for many advice practices. Most advisers absorb much of the costs of onboarding and advising new clients, which is not sustainable in the long term. Absorbing some of these costs will be viable if the compliance and administrative burden of ongoing advice arrangements are simplified, however, to reduce these costs, we need to simplify the advice process. Some practical suggestions to achieve this would include:

File keeping requirements need to be simplified and Safe Harbour abolished

There are few other professions where there exists such a high burden of proof for an adviser to demonstrate the appropriateness of their advice. In most other cases, inappropriateness generally needs to be demonstrated for them to be sanctioned or found liable.

Shouldering this burden of proof has resulted in convoluted and complicated file keeping and disclosure requirements, which in turn increases the cost of providing advice. Perhaps a more moderate framework needs to be considered and abolishing the Safe Harbour provision would go a long way to achieving this.

Advice documents need to be simplified

Statements of Advice (SOA) should serve the purpose of educating and informing clients about how the advice provided meets their goals and objectives. At present, SOAs are too lengthy and often difficult for the client to understand. They are effectively compliance documents, but they have the potential to be so much more! Therefore, the SOA framework needs to be significantly simplified and this will make for more informed clients as they are more likely to read and understand the advice provided.

Financial Disclosure Statement (FDS) should be abolished

Client fee consent every one or preferably two years should be sufficient. If a client is unhappy with their service and advice, they simply will not renew their consent arrangement. Why have an extra piece of confusing disclosure, which adds no real value to the adviser, or the client?

3. We need to stop perpetuating mistrust in financial advisers

The reputational denigration of financial advisers needs to come to an end. We have held up our end of the bargain (meeting education standards and fee consent requirements, just for starters), and we need support from the government to rebuild consumer perception regarding the value of quality financial advice.

4. Continue to provide certainty in the superannuation system

Superannuation is the largest investment for many, outside of the family home. The superannuation system must continue to serve its purpose in ensuring that Australians have security and financial independence in retirement. Superannuation legislation needs to be viewed with a long-term lens, and not as an election sweetener.

It has been positive to see that the communication coming from both parties demonstrates a desire to reform the financial advice framework to be less onerous and more affordable in the lead up to this election. I learned a long time ago to judge people and governments by what they do rather than what they say. This new term of government should serve as an opportunity to rebuild trust with the advice community and recalibrate financial advice regulation, learn from the mistakes made, and seek to ensure that the financial advice profession is in the best position to continue to provide quality advice to those Australians that need it.

By Eugene Ardino, CEO

———

[1] Adviser Ratings AR Landscape Report, April 2022
[2] Ibid.

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Mr Mantineo is based in Melbourne and has a financial services career spanning 30 years, much of which was spent in general management and national roles for a broad range of financial organisations, namely Clearview – Matrix/LaVista, Australian Unity Advice, IOOF licensees, Financial Wisdom Ltd, and AXA.

Lifespan Partnership’s self-licensee solution is suitable both for current self-licensees and aspiring self-licensees, who prefer the freedom of individual licensing but also understand that a level of support, tailored to their needs, is invaluable in today’s ever-changing industry. In each case the dedicated Lifespan Partnership solution caters to self-licensee’s individual needs, and each self-licensee only pays for the services they require.

Lifespan CEO, Eugene Ardino, said Mr Mantineo’s financial advice industry experience and strategic growth planning and implementation expertise would strengthen Lifespan’s commitment to new and existing practices within the Lifespan community.

“Tony has a wealth of experience in the financial planning space, and in growing and managing self-licensee businesses. We are very pleased to have someone of his calibre leading what is being developed as a key aspect of the Lifespan offering.”

Mr Mantineo said he was looking forward to stepping into the role, managing a self-licensee solution that provided autonomy, certainty, and flexibility, and reflected the values of the broader Lifespan Financial Planning community.

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Adrian has more than 15 years’ experience in financial services with his most recent roles focusing on compliance, risk management and governance. Over this period he has worked for a range of organisations including Avant Mutual, KPMG Australia, Total Financial Solutions and ANZ.

He last worked for Lifespan between 2011 and 2014, has a Bachelor of Business from Victoria University and is a Fellow of the Governance Institute of Australia.

As Lifespan continues to bolster its compliance support, it has also made a number of other senior hires this year, following a period of rapid growth, to boost its practice development, governance, investment research and managed account expertise.

Lifespan CEO Eugene Ardino welcomed Adrian back to the company. “Adrian’s appointment is a reflection of our commitment to meet the ongoing support needs of our advice community and is a proactive response to evolving legislative requirements.

“Adrian is a safe pair of hands and will be a reliable source of knowledge for our advice community. He will provide leadership in our compliance and risk management approach and will assist Lifespan to further deliver proactive and collaborative compliance and risk management support.” Mr Ardino said.

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Brian Long has joined Lifespan as ‘Senior Investment Specialist – Managed Accounts’ and as a member of the Lifespan Investment Committee after a string of senior investment roles which focused on helping advisers improve the financial lives of their clients.

His previous leadership positions have included Head of Retirement for NAB Wealth and JANA Investment Consulting, National Manager Retirement at Colonial First State and Head of Wealth Management, Pacific at Global Research and Investment House Mercer.

Lifespan CEO Eugene Ardino said the addition of Mr Long was all about increasing support for Lifespan advisers in meeting the changing needs of their clients.

“Like Lifespan, Brian believes that there will be significant investment challenges in the future and as a result, advisers may seek to change client portfolios more frequently to respond to increased volatility and to take advantage of new investment opportunities. Clients will also take an increased interest in understanding their investments. A focus on client education will be essential.

“Lifespan’s range of 30 model portfolios, available on three platforms, with more to come, and Brian’s considerable experience and expertise will greatly assist our advisers with their investment proposition and related client education needs,” Mr Ardino said.

Mr Long added: “One of the reasons I was attracted to Lifespan is that it is one of Australia’s most experienced MDA operators, having offered MDAs to advisers and their clients for more than 15 years.  Recent times have clearly highlighted the benefits of managed accounts to advice businesses and advisers, particularly when it comes to adapting to market volatility.

“With an MDA, advisers can ensure investment decisions are more quickly implemented across the entirety of a client base to protect portfolios or take advantage of market opportunities. There are of course numerous efficiency benefits that are also gained by using MDA portfolios. The more advisers use MDAs the better it is for their clients and themselves,” he said.

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Kevin Mayne joins Lifespan after more than five years as a regional manager at Elders Financial Planning, where he oversaw the firm’s advisers based in New South Wales, Queensland, Western Australia and the Northern Territory.

Industry veteran Lisa Ng joins Lifespan from Xplore Wealth, where she served as State Distribution Manager for the firm’s Managed Discretionary Accounts service over the past two years.

The new additions increase the size of Lifespan’s practice development team to five and ensures it can continue to provide award-winning support to Lifespan’s network of over 270 authorised representatives.

Lifespan CEO Eugene Ardino said Lisa and Kevin would also be invaluable in supporting the continued growth of the group, which attracted 95 new authorised representatives over the past year, despite a challenging backdrop.

“With decades of experience between them across business development, distribution, sales and practice management, Kevin and Lisa will be valuable sources of knowledge and trustworthy sounding boards for our network of authorised representatives as they seek to grow and adapt their practices in the changing economic and regulatory environment,” Mr Ardino said.

Kevin Mayne said he was attracted to work for Lifespan because of its reputation as a licensee that cares about its clients and advisers. “Lifespan is one of Australia’s largest privately owned financial advice networks and yet it treats everyone in its team like a member of the family,” he said.

Lisa Ng said she was pleased to be part of a rapidly growing and innovative licensee that constantly looked for ways to make the lives of its advisers easier, so that they can focus on what they do best, advising their clients. “The ongoing expansion of Lifespan’s managed discretionary account offering is a great example of this,” she said.

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Eugene Ardino

Lifespan Financial Planning, one of Australia’s largest privately owned financial advice networks, has launched a suite of Managed Discretionary Account portfolio solutions on BT Panorama.

A range of 30 Lifespan model portfolios are now available for financial planners in Lifespan’s adviser network using BT Panorama, the Australian retail platform with the largest rolling annual net flow[1]. The model portfolios are available across a range of risk profiles and enable investment in Strategic Asset Allocation portfolios, with the option to blend Tactical Asset Allocation.

Lifespan CEO, Eugene Ardino, said the move was designed to broaden the reach of Lifespan’s managed discretionary account solutions to as many of the firm’s more than 250 advisers and their clients as possible.

“We’re looking to boost the availability of MDAs to the adviser community, as advice business and adviser use of managed accounts and portfolios increases. Adding 30 of our model portfolios to one of the fastest growing retail platforms in Australia is a great way to do that.

“We will also be making our bespoke MDA and model portfolio options available to the broader adviser community via Lifespan Partnership, our support service for existing self-licensees and those advice businesses wanting to transition to their own individual AFSL,” Ardino said.

Lifespan is one of Australia’s most experienced MDA operators, having offered MDAs to advisers and their clients for more than 15 years. Lifespan’s MDAs are due diligence checked and approved by Lifespan Research and Investment Committee members, in consultation with global asset consultant Mercer.

Lifespan’s MDA solutions are offered either as easy-to-use dealer portfolios or customised solutions designed for the right advice firms. BT Panorama houses 10 Lifespan Strategic Asset Allocation portfolios, and 20 pre-blended Strategic and Tactical Asset Allocation combinations, which includes a range of low-cost index options.

“The COVID-19 pandemic has clearly highlighted the benefits of managed accounts to advice businesses and advisers, particularly when it comes to adapting to market volatility. With an MDA, advisers can ensure investment decisions are more quickly implemented across the entirety of a client base to protect portfolios or take advantage of buying opportunities,” Ardino added.

“The popularity of managed accounts is being driven by the benefits they provide advisers and their clients, such as reduced back-office burden, the ability to run a tactical overlay for downside protection and reduced business and compliance risk.

“Research shows that around 37% of advice practices currently use managed accounts and this will jump to 52% of the industry by 2022. Lifespan is at the forefront of this trend, with more than $450 million in MDA services for over 1500 clients, and we expect that number to grow rapidly as we continue to boost the availability of MDAs to the adviser community,” he said.

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Eugene Ardino

Lifespan Financial Planning, one of Australia’s largest privately owned financial advice networks, has today launched a broad ranging support service for existing self-licensees and those advice businesses wanting to transition to their own individual AFSL.

Lifespan Partnership will cater to both current self-licensees or aspiring self-licensees who prefer the freedom of individual licensing but also understand that a level of support, tailored to their needs is invaluable in today’s ever-changing industry. The new business is headed by highly regarded National Practice Consultant, Jill Tunkin.

Lifespan CEO, Eugene Ardino, said the creation of Lifespan Partnership was prompted by the increase in demand for individual licensing in the wake of the Hayne royal commission.

“We experienced a marked increase in interest for individual licensing across 2019. The greater degree of freedom that it allows is certainly appealing for many advisers, but we recognised an opportunity to add to that proposition by offering the security and convenience of best-of-breed ancillary services,” he said.

Lifespan Partnership’s support services are grouped into four modules, comprising: virtual services; practice consultancy, compliance, and education and training. The modules can be mixed and matched according to each individual self-licensee’s needs.

The modules are also available as pre-packaged bundles designed to suit a self-licensee’s typical life stage. For example, more experienced self-licensees would typically require less formalised support, whereas a newly established self-licensee would typically require full support to guide them through the earlier stages of their AFSL journey.

In each case, the dedicated Lifespan Partnership packages cater to self-licensee’s individual needs, and each self-licensee would only pay for the services they utilise.

The offering also includes a ‘Partnership Program’ which comprises around 40 peripheral service providers supplying services that pertain to either AFSL obligations or those that promote operational efficiency. These include services such as SOA software generation through to paraplanning, marketing and investment consulting. The Partnership Program is essentially connecting industry participants in a mouse click.

Ms Tunkin said the design of the Lifespan Partnership support services was based on the many discussions she had with self-licensees over past years.

“The advisers I spoke to invariably voiced their desire for services that suited their individual needs and preferences. They wanted a vast network of peripheral services and contacts to be provided at their fingertips and an engagement level that they wanted to control. So, I have endeavoured to provide this in the Lifespan Partnership offering,” she said.

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