Labor damage control crucial, says adviser

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An Australian financial adviser has written to the new government with suggestions on how to balance out the “damage” done to the financial services industry by the Labor government.

Peter Corrie has become so disgruntled with the state of the financial services industry that he has taken it upon himself to suggest improvements to Treasurer Joe Hockey.

Australia’s population could support another 10,000 financial advisors but reforms imposed to protect the consumer have had a negative effect on a shrinking industry, says Corrie.

“As the number of advisers diminishes, the country will suffer from under-insurance, less wealth accumulation and greater numbers on welfare, all of which is counter to Liberal principles and individual advancement.”

Top of the list of suggested changes is to make commission on superannuation and investment products the consumer’s choice, Corrie says.

“Jobs have been lost and there are many more retrenchments to come. It is difficult to evaluate future job losses due to fee for service and subsequent lower incomes.”

Corrie also believes conflicted remuneration is a socialist and contradictory concept which needs to be replaced with another, such as “competitive remuneration”. Leaving things as they are restricts choice and competition and reduces incentive by controlling prices and incomes, he says.

Other suggestions include reinstating group life commission, banning ASIC’s controversial shadow shopping practice, abolishing the time-consuming opt in process, and opening up the My Super scheme with more advisor involvement, competition and choice.

“Labor’s regressive over-regulation has not only been expensive to implement, but has resulted in unnecessary complexity, restrictions, penalties and other problems,” Corrie says.

The suggestions were also sent to the AFA, FPA and other interested parties.

AFA president Michael Nowak responded to Corrie to congratulate him on being pro-active, says an AFA spokeswoman. She says the AFA are working with the government to address these issues.

“The AFA have discussed the issues raised on behalf of all members with the new Government, and in addition had Arthur Sinodinos speak on the industry issues at the AFA National Conference last month, where he did outline the Coalitions plan.”

 

 

  • Mel on 4/11/2013 10:00:23 AM

    Yes! I personally don't have a problem with FFS for investment and super advice, but agree it should be the informed consumers choice. So as long as there is disclosure, who cares.

  • Alistair on 4/11/2013 10:12:33 AM

    It is time the issues in our industry are discussed openly by the very people in the gun with their businesses and countless support staff, all who are under threat financially. These are the advisers.
    Our so called ally in this the FPA is proven to be nothing more than a self interested entity that really does not seem to be able to do very much and did next to nothing for our industry when Labor was in office. Now with more that $2M in profit in 2013, where is the action to support advisers....negligible to nothing.
    They are interested in promoting their courses though. More revenue but to hell with supporting the adviser.
    The AFA, recently did someting worthwhile in promoting the value of advice.
    Yes folks the more advisers stand up against the morons in the industry such as those found in the FPA and not to mention stupid politicians especially in the non thinking Labor and Greens the better the fiscal outlook of Australia will be. Underinsurance, increased dependency of Age Pensions and higher taxation is the legacy of fools such as Labor and the Greens. The FPA need to pay attention that there are many angry advisers who are reluctant members of the FPA. The Liberals need to get cracking now and immediately to stop the many business owners and there staff from going broke under a weight of regulation.

  • alleycat on 4/11/2013 12:05:23 PM

    The answer to how we all get paid is very simple.
    Have a scale of fees for each service and how the client pays for this becomes irrelevant !!
    What should matter is ...the quality of the advice.
    Fees for service and commissions are flawed concepts,...when abused.
    All those "holier than thou" who charge a fee for service, there's only one real question, what justifies your price ?
    What makes you think your worth $300 + per hour ? What makes you think your advice is any better than someone charging $150 per hour ? Two University degrees v's one ?
    Is your twice as good for charging twice as much ?
    Who verifies billable hours ?
    Why should anyone take your word for it ?

  • James Howarth on 5/11/2013 8:40:55 AM

    "Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government." --Milton Friedman

  • Keith L. on 5/11/2013 9:56:38 AM

    Like every adviser in Australia, I'm drowning. Regulation is choking the life out of an industry which should be beneficial to all Australians but which has been skewed towards the one size fits all industry funds. Corrie is spot on and states what we all know.

    I have heard all the arguments about conflicted remuneration and banning of commissions but in many cases commission is the preferred choice of our clients. Knowing fee for service was inevitable, for two years I offered clients choice of paying for my services by fees deducted from their product or commission also deducted from the product. I structured the figures so there was no difference in cost. With one exception, all selected commission a choice which is now denied them. As Mel comments, if there is full disclosure, who cares?

    We have all been going through the costly Fee Disclosure Statement process to which I have only had one reaction and that was a protest about sending out another piece of crap!

    I hope Mr Hockey responds in a sensible manner to Corrie's representation as I believe it paraphrases what we all believe.

  • James Howarth on 5/11/2013 1:07:43 PM

    The x general counsel for Macquarie who works at ASIC is a she.

    All ASIC staff should have to declare their share holdings, in fact the should be forced to only own managed funds. Good luck trying to find an adviser to assist in this though.

    See ASIC has become a tool for banking power consolidation and control.

    Dealer groups are majority bank owned and this should also be reviewed.

    All advisers should be licensed direct by a professional association.

    No corporate license should be issued, just direct licensing of employee advisers, if that is the route the adviser chooses.

    Licensing should be issued to anyone who can demonstrate educational requirements, not banned lawyers that ASIC has currently licensed and not only lawyers, as they suggested to me.

    The x lawyer I refer to, his judgement by the legal profession was "never to deal with a financial institution again", but ASIC issued a financial services license to a pty ltd in his control.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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