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Debate is heating up regarding the federal government’s proposed Future of Financial Planning (FOFA) legislation. This comes out of two enquiries – The Ripoll enquiry into financial services and the Cooper review of superannuation.
There is a raft of proposed changes but the key issues for debate that clients should be aware of are:
So what’s the bottom line to all of this?
Professional financial advisers provide invaluable advice and continuous service to their clients and the financial and other benefits are clearly demonstrable. In our experience, the partnership formed between client and adviser is extremely close and entails continuous contact and consultation. The adviser needs to be totally across all the client’s changes in circumstances and pro-actively respond to changes in legislation, events such as birthdays that trigger strategic changes, investment markets, portfolio re-balancing to mention just a few.
Unfortunately it seems that the regulator is so product focussed that it does not understand the true essence and importance of the ongoing relationship between the client and the financial adviser. ASIC has recently come out with strong statements against the future existence of asset-based fees. I make two points on this – firstly, it is incumbent forASIC to understand the nature and viability of financial planning businesses and suggest a viable alternative.
I suggest to = ASIC that clients would have been glad of asset-based fees during the GFC as their fees would have fallen considerably in line with the value of their portfolios.
At the end of the day, the calculation of fees is irrelevant. It is the issue of fairness and transparency that is important; that the client fully and clearly understands what they are paying, who they are paying and the service they can expect for their outlay. It is incumbent upon the adviser to provide a service that represents value to the client for the fees they pay.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.