FPA CEO Dante De Gori CFP®, and FPA Head of Policy, Strategy and Innovation Ben Marshan CFP®, appeared before the House Economic Committee yesterday, to provide an update on current issues impacting financial planning, including the cost of advice, increasing gender diversity and further scope for innovation in the profession.
Responding to questions regarding the 340 per cent increase in the ASIC levy, Mr De Gori, reinforced the FPA’s position that the current formula for the levy is not equitable or sustainable and will cost the industry.
“In any industry, if a cost or a fee was to increase by 340 per cent over four years that industry would be unsustainable,” Mr De Gori said, adding that the levy ranked highly in the concerns of financial planners.
He acknowledged that while the fee was borne by the licensee the costs were ultimately passed on to the individual financial planner.
Mr De Gori again called for the Government to review the implementation of the levy and its impact on the profession. “We don’t believe the way the formula is calculated and the way it is dispersed is equitable and fair.
“We want that [the levy] to be reviewed. There are activities that we’re aware ASIC undertakes that have nothing to do with financial planners, yet they are placing that cost on financial planners through his levy.”
Towards the digital statement of advice (SOA)
Senate Committee member Jason Falinski highlighted the “absurdity” of the current approach to statements of advice that are now 100 pages, adding that 92 pages were just to satisfy the lawyers.
The FPA will continue to advocate for digital SOAs to help develop more accessible, personalised and meaningful client experiences during the advice process. Mr Marshan highlighted that the current regulatory framework required lengthy SOAs. While ASIC’s sample SOAs are only eight to 12 pages, the financial planning profession is overseen by eight different regulators.
“We have numerous complaints and disciplinary systems and processes that financial planners need to comply with,” Mr Marshan said.
“The only way that a financial planner and its licensee can be comfortable that they’ve got a defensible position against a complaint is, if they have a document that ensures every warning, every consideration and every recommendation documented. That is why SOAs are 100 pages long,” he added.
The FPA is working with ASIC to create a digital SOA which will reduce the cost and time to deliver the SOA to the client.
Supporting greater female participation
The FPA outlined its plans to boost more women in the profession as the Senate Committee expressed concerns that financial planning was a male dominated profession.
The FPA plans to boost female membership from its current level of 27 per cent to 50 per cent, supported by peer networking programs as well as being a recipient of the Government’s $1.5 million Women in Finance and Economics scholarships program.
“As a recipient of the Women in Financial and Economics grant program, we are able to drive that female membership goal further. The FPA will be undertaking the delivery of 38 scholarships over the next two years to help women advance their careers in financial planning,” Mr De Gori said.
Continued support for the profession
Mr De Gori acknowledged that financial planning has gone through an unprecedented period of change highlighting a myriad of challenges confronting the profession.
These include significant new reforms that brought rapid and exponential regulatory costs, as well as inaccessible and increasing client documentation requirements, which impact client engagement with the advice process.
Further, Mr De Gori urged the Committee to remain vigilant with increasing regulation in the profession.
“The FPA’s view is that, in its approach to regulating financial services, the Government needs to consider the totality of these changes and how they are affecting the long-term viability of the financial planning profession, and the cost and accessibility of financial advice for consumers”, he added.
“Affordable advice, a key objective in the FPA’s five-year strategic roadmap remains front and centre. Making financial advice more affordable for all Australians starts with making financial planning more affordable to practice”, added Mr De Gori.