What’s with financial advisers fighting for their ‘grandfathering‘?
Should you care?
Because it could be your money the advisers are fighting to hang onto.
Firstly, what does grandfathering mean?
Wikipedia suggests that ‘grandfathering’ “is a provision in which an old rule continues to apply to some existing situations while a new rule will apply to all future cases”.
Maybe not. OK.
Are you affected?
So, what does grandfathering possibly got to do with you and your money?
A few years ago (1st July 2014 specifically) new regulations were implemented called Future of Financial Advice (FoFA).
Among other things, these new FoFA regulations banned the annual charge Australians automatically (re-read that “automatically”) paid every year for financial “services”. Actually, “services” is being too generous because you were paying for on-going advice fees just to have your superannuation sitting in a superannuation fund.
You might have heard of the government’s Fee for No Service Report?
You get the idea? No?
Reasonable Australians might have thought that NOT being forced to pay automatically every year was the default?
That’s how most things work, isn’t it?
Considering we do not keep paying the salesperson for the cars we buy, nor keep paying the real estate agent for our apartment they sold us or keep paying the surgeon who fixed our bung knee years ago.
Why keep paying every year the person who originally ‘placed’ our funds into super, or invested our monies, or set up our insurance policies?
And one being asked a lot more about the default settings embedded throughout the financial services universe.
Anyway – for any Australian putting money into their superannuation (which is everyone who works) or investments, FOFA really was progress.
If you had superannuation or investments prior introduction of the FoFA regulations (i.e. if you were earning prior July 2014 which is most of us older than roughly 25, isn’t it?) then you probably still are continuing to pay someone (or some institution or both) and depleting your precious balances because your money, like millions like you, was ‘grandfathered’.
I write all this to ask a simple question…
Are you happy about that?
Are you happy to automatically keep paying someone dwindling YOUR superannuation or investment accounts for services?
If you are? And you’re getting great value for the money you pay each year. Fantastic.
If you’re not – contact these guys.
It’s probably too hard legally to cease grandfathering so don’t hold your breath waiting for the industry to align value and service as someone chips away every day at your money.
So if you’re older then 25, you are probably affected.
It’s your money, no one else’s. If you’re unhappy that others might be clipping your hard-earned money, contact whoever set up your superannuation, investments or insurances (or use the link to Financial Ombudsman Service) to ensure all on-going advice fees are turned off, otherwise, your dripping tap will make others richer at your real expense.
Hopefully, the new era of financial services will be less mischievous, more transparent and valuable than what we’ve had to put up with for the last 25 years.
What do you reckon?
About Jim Stackpool
For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, a collection of Advisory Firms all over Australia that separates financial advice from financial products as their preferred approach to deliver financial certainty for clients without any conflicted product payments. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book is Seeking Certainty.