The Government should not be interfering with how professional financial advisers charge their clients.
Really?
This is one of the many arguments against the proposed Opt-in provisions in the Future of Financial Advice (FOFA) legislation.
The argument is a tad ironic when you consider that it was the Hawke/Keating government ‘intervention’ that laid the basis of our current industry with the forced introduction of compulsory superannuation nearly 21 years ago.
At the time, the financial actuaries and engineers knew exactly what they were doing when they crafted superannuation products and platforms that had at their heart the opt-in setting in default ‘on’ position.
Whilst these early superannuation product pioneers had less insight into what the workings of our industry would be in 2012, they took the clues from the accounting profession which had to renegotiate their professional fees every year and saw that model as ‘too hard’.
They quietly (remember what fee compliance was like 20 years ago?) and deliberating elected to hard-wire their early superannuation products with the default set at opt-in rather than the more common ‘opt-out’ that every other professional runs their business by.
Therefore the government has elected to “intervene”.
Just like the government ‘intervened’ by stipulating how doctors will get paid when they nationalised medicine with their forced introduction of medicare. Just like the government will continue to ‘intervene’ in areas of profits on mining companies, entry guidelines for asylum seekers, bans on smoking in public places.
Another argument against the proposed FOFA reforms touted by the FPA Head Mark Rantall, is that no government elsewhere in the world is pushing such an agenda.
He may be right.
But we have a ‘world-class’ financial advice marketplace.
Late last year, a Melbourne Mercer global pension index study (conducted by Australian Centre for Financial Study) found that, after the Netherlands, Australia is the next best provider of retirement incomes in the world.
To maintain our ‘world-class’ reputation we need ‘world-class’ leadership in the form of legislation to ensure the future goal-posts and boundaries reflect the emerging advice environment whilst relinquishing our product-based heritage upon which most of today’s well-established advice practices were formed.
It could be said that our industry was created when our government took the steps to float the dollar and introduce compulsory superannuation. I believe it’s a unintelligent argument from those against Opt-In to now cry foul for the government prescribing a more transparent, easily understood and consistent form of client re-engagement.
What do you think?