The Future of Financial Advice (FOFA) reforms have created a more politically engaged financial advisory sector, however, the government has not yet appropriately responded to the issue of full alignment disclosure, the head of an advice group said.
Boutique Financial Planning Principals Group (BFPPG) Claude Santucci told InvestorDaily the difficulty the industry has is that the government remains unfocused on the need to disclose the difference between an ‘independent’ adviser and an aligned adviser.
“The difficulty we have is that government still hasn’t focused on the importance of full disclosure and until they do that this whole idea of acting in a client’s best interest is going to be wishful thinking,” Santucci said.
“I say that from the point of view of representing those that have got their own licence.”
BFPPG has been lobbying for full disclosure and an upfront notice to clients by licensees that had limited and restricted arrangements with an institution, Santucci said.
“Are we engaged with government? Yes. Do we think we’re heading in the right direction? Yes, at least the government’s recognised that there are financial planners that hold themselves up to a higher standard,” he said.
BFPPG members have been actively lobbying the government over FOFA, with many personally meeting with members of parliament and providing submissions to the Parliamentary Joint Committee, he said.
“What’s come out of FOFA is a step in the right direction but all clients need to be given the respect of knowing who they’re dealing with,” he said.
“[The government] hasn’t addressed full disclosure and it’s hard to see them doing but I think it will happen eventually.”
Santucci said BFPPG also wanted the potential misuse of scaled advice to be addressed by government.
“The government is just starting to understand financial planning up til now where they’ve thought it’s all about transactions,” he said.
“We need to be careful that scaled advice doesn’t become an excuse to give advice without paying attention to the circumstances and the context around that advice.”
FPA chief executive Mark Rantall also weighed in on the debate.
Rantall said as the government was now across the issues in the industry, planners themselves were becoming aware of the political process.
“One positive that came out of this was that financial planners on a national basis really took up the challenge to go and engage with politicians,” he said.
“There wasn’t an active campaign before FOFA on behalf of financial planners generally to engage with their local politicians other than what might have been done in the normal course of work with the community.”
FOFA accelerated the “building of a burning platform” that encouraged financial planners to talk to their political members, Rantall said.
“Up until now, we’ve been quite opaque with what politicians knew about us and the role that we played,” he said.
