The Financial Planning Association (FPA) welcomes all moves that promote the value of financial planning advice, encouraging ISN members to make sure their advice meets with the professional standards of the FPA.

“We know it’s difficult for Super Fund members to trust whether they’re in the right fund or getting the right advice,” said FPA CEO Mark Rantall. “However cost and the way a Financial Planner charges for their services should not be the primary focus as is the case with the current ISN advertisements.”

“If there is a crisis of confidence in Superannuation funds, financial markets and advice more generally, it should encourage people to make sure they’re getting the best advice and that the advice they’re getting takes into account their own and their family’s complete financial circumstances, not just their superannuation needs.”

The FPA continues to receive widespread support for its new strategic plan to make it a true professional association, providing even greater confidence in professional advice for all Australians. The introduction of the new strategy, to be voted on by members in April, will be supported by a national advertising campaign to promote the benefits of seeking advice from FPA members.

Research shows that financial planners with the full range of FPA expertise are the preferred source of advice for people considering their retirement.

The FPA offers a checklist for consumers whether using a certified financial planner or an adviser within your Super Fund:

1. No client should pay fees or commissions (or cross subsidised fees from other fund members or any other form of fee) if they are not in receipt of professional services.

• • Check your Super Fund statement and with your Financial Planner to make sure you are not paying fees for services you don’t get.

2. No client should have their investment advice services paid for by Super Funds or any other product providers because you then can’t be sure whose interest they are acting in. FPA members have already committed to full product and advice transparency and the banning of commissions for investment products.

• • Check with your product provider adviser (Super Fund or other) to make sure you’re paying for the advice you receive – you deserve to know they’re interested in only your future and not theirs or other members.

3. No client should be forced into the formula advice a product provider or financial planner wants to offer you. Your retirement future is all about you and your family and you deserve to make an informed choice about the right services for you. In many instances the right choice will be to call your super fund and get the advice they can offer only within the scope of their product capabilities.

• • Check with your advice provider (Super Fund or Financial Planner) and ask them about the choices of advice and financial strategies for your future. It’s your choice and your future.

4. Every client deserves the maximum consumer protection available when getting advice.  Financial Advice is complex, even when it’s only about Superannuation. Different product providers and Super Funds have different limitations on their liability for the advice they give you. Only Financial Planners, fully authorised under the Corporations Act are subject to the full obligations of the Corporations Act and only FPA members are required to maintain professional obligations over and above the law.

• • Check with your Financial Planner (they might work for your Super Fund or outside of a product provider). Is the advice they’re offering you subject to Corporations Act and have they met the full professional obligations as members of the FPA?

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ASIC oversees the regulation of financial planners and all aspects of financial planning advice that they provide, including tax.

Contrary to initial press reports, today’s announcement will not force Financial Planners to adhere to standards set by the Tax Practitioners Board but rather competency levels will be established by ASIC, in consultation with the Tax Practitioners Board.

However, the FPA does believe dual regulation of tax and financial planning will add to cost, confusion and complexity for consumers.

“We support the lifting of competency standards for financial planners in all areas of advice including tax but do not support duplication of licensing and registration that will add another layer of compliance and ultimately push up the cost of advice for all Australians,” FPA CEO Mark Rantall said.

“The FPA sees no benefit for the industry or the consumer if financial planners were to be registered under both ASIC and the Tax Practitioners Board.”

“Financial Planners are not Tax Agents and do not seek to be. They don’t lodge client tax returns or deal with the ATO regarding their tax returns.”

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Conducted by Dr June Smith through Victoria University, the research: Ethics and financial advice: the final frontier, looks at ethical and professional issues associated with the provision of financial advice in Australia. The research represents one of the first studies of its kind in the world.

The study revealed a real reputation risk for financial advisory firms that cannot ensure their planners can meet ever increasing ethical and conduct standards.

Significantly, advisers who hold a professional designation or accreditation were found to have higher ethical reasoning levels than those who do not. In particular, CERTIFIED FINANCIAL PLANNER professionals had the highest level of ethical reasoning and as a result are best prepared to face complex ethical dilemmas in daily practice.

“Ethical conduct and behaviour are pivotal to the ability of financial advisers to retain the trust and confidence of clients and to ensure quality financial advisory outcomes,” Dr Smith said. “Financial Planning, in particular, is also an emerging profession both within Australia and internationally, and requires a strong ethical context to meet stakeholder expectations concerning the conduct and behaviour of its participants.”

“The findings in this study suggest that all financial advisers within the sector should be encouraged to join a professional association and undertake ethics training and education courses as part of an accreditation process.”

The study also recommends financial services organisations use CFP® practitioners in ethical leadership and mentoring roles and supports the move to a professional year in line with FPA standards.

In its new three year strategic plan launched in late 2010, the FPA proposed that from July 2013, new members require an approved undergraduate degree (or higher) qualification and undertake a supervised professional year program to ensure they earn the right to represent FPA professionals in the community.

“As this research concludes, the Future of Financial Advice reforms (FOFA) are just a first step in raising  the conduct and professional standards within the financial advisory sector,” FPA CEO Mark Rantall said.

“Higher educational standards, adherence to a professional Code of Ethics and exposure to professional obligations raise industry standards and best protect the financial future of all Australians.”

For a copy of the research report please click here.

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The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has welcomed comments in the media this week by Cooper Panel chairman Jeremy Cooper about the high level of competency and financial expertise of SMSF trustees, but has questioned speculation about whether trustee quality could be eroded by future sector growth.

The final Cooper panel report, released by Jeremy Cooper in July called the $390 billion SMSF sector, the largest by assets in the $1.2 trillion super system, “well functioning and successful”. The SMSF sector is
home to 428,000 funds and 815,000 trustees with an average member balance of $480,000.

“We agree with Jeremy Cooper, chairman of the Cooper Panel, that the SMSF sector is successful due to the high level of competency and financial expertise of those who set them up and we intend to see that
standard increased through pushing for higher standards for advisers, while expanding educational opportunities for trustees,” said Sharyn Long, chairman of SPAA.

“SPAA is supportive of the Cooper Review’s recommendations for higher competencies for SMSF auditors and advisers and has advocated for this through our contribution to the Cooper Review process and the Future of Financial Advice (FoFA) reform process,” said Ms Long.

She said SPAA has witnessed growing numbers of advisers applying for and completing accreditation as either a SPAA Specialist Adviser or a SPAA Specialist Auditor.

On the SMSF trustee front, Ms Long said SPAA, in an industry first, had recently launched an SMSF trustee education curriculum guide to encourage education providers and industry practitioners to create and provide SMSF trustee training.

“We believe that as the numbers of funds and member balances grow, more and more trustees will seek to educate themselves about their responsibilities and obligations, many of them encouraged by their advisers,” Ms Long said.

Ms Long said SPAA would continue to work closely with regulator, the Australian Tax Office (ATO) on issues affecting the SMSF sector and with the APRA regulated fund sector on industry matters.

“SPAA supports comments made by Superannuation Minister Bill Shorten and company director and former Olympics luminary, Rod McGeoch, at the Association of Superannuation Funds of Australia conference this week, that fund sectors should work together to improve the industry and the outcomes for fund members,” Ms Long said.

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The Self Managed Super Fund Professionals’ Association (SPAA) has called for amendments to an Accounting Professional and Ethical Standards Board (APESB) Exposure Draft, which, in its current form, will prevent SPAA members, who are also members of certain accounting bodies, from charging asset-based fees. While SPAA is opposed to commissions or fees embedded in a product, the association believes the definition of fee for service should be broad enough to reflect the skill, experience and level of complexity of the work being undertaken and be flexible enough to permit negotiation between a professional adviser and their client.

The APESB governs the rules by which many professional accountants must conduct themselves. A large proportion of SPAA’s members are accountants who also work as financial planners and are likely to be
affected by this proposed new standard.

“SPAA has taken a keen interest in reviewing the Exposure Draft on APES 230: financial advisory services because we believe it imposes unreasonable and unsustainable obligations on some SPAA members, namely accountants working as financial planners,” said Andrea Slattery, SPAA CEO.

“SPAA is committed to the highest professional standards, therefore we support the APESB’s proposed ban on commissions. However, unlike the APESB, we support an SMSF adviser’s right to charge assetbased
fees for service where these are not embedded or set by the product provider. As long as the fee has not been set by the product provider, advisers should have the right to charge a fee which has been agreed to by the client and reflects the services provided. We also note that the Federal Government’s proposed Future of Financial Advice Reforms (FoFA) does not seek to ban asset-based fees either.”

“In our comments on the APESB Exposure Draft, we also expressed our concern that the proposed APESB standard has an implementation date of July 2011, one year before FoFA is due to take effect.”
Ms Slattery said the Government consultation process would highlight other issues that should be considered before the release of APES 230.

“We agree APES 230 should apply to existing clients but only after an appropriate transitional period. It is difficult to foresee how a regime which provides for different standards to be applied to different clients
would be sustainable or desirable over the longer term. This transitional period should be sufficient to enable advisors to make the necessary changes to their existing charging practices and to ensure clients
can be transitioned to a new fee charging regime in an efficient and orderly manner,” Ms Slattery said.

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It is anticipated that the Trustmark will be used much like the Heart Foundation Tick for healthy foods, with the Trustmark helping Australian consumers identify quality financial products and services that meet the high standards set by the Financial Services Council.

Australians will see the Trustmark on financial products and services issued by members of the Financial Services Council including companies in the superannuation and life insurance industries.  Companies wishing to use the Trustmark must adhere to the 16 standards administered by the Financial Services Council, some of which relate to fee structures and product commissions.

Launching the campaign, John Brogden, CEO of the Financial Services Council said: “Thousands of mum and dad investors lost their life savings in recent financial collapses such as Storm Financial.  This has left many Australians wary of investing and in need of a signpost for financial products and services that are committed to high quality, transparency and bound by high standards.

“The introduction of the Trustmark is a positive move to ensure tighter compliance with standards and will provide Australians with the confidence they need when making financial decisions – from the management of their super contributions to the selection of their life insurance provider.  The Trustmark will ultimately ensure that Australians know and trust who they are dealing with”

The Trustmark will be introduced from 1 January 2011 and consumers should expect to see the Trustmark used from this date.

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