The financial planning industry needs balance in the debate on disclosure, Investment and Financial Services Association (IFSA) boss Richard Gilbert said.
Gilbert responded to a story in yesterday's InvestorDaily that reported comments by influential financial planner Bruce Baker who criticised licensees for failing to disclose conflicts of interest.
Baker called for changes to business operations to allow better transparency.
Gilbert said Baker's ideas have merit but any breaches of the law needed to be first reported to the regulator.
"The industry is acutely aware of managing conflicts of interest," Gilbert said.
"We've been through all these issues with the regulator.there needs to be a balanced debate on this subject."
Baker, a planner with Queensland-based Puzzle Financial Advice, has proposed several changes that he believes would improve disclosure. He has released these in a draft paper about to be issued by the Boutique Financial Planning Principles Group (BFPPG), of which Baker is head of compliance.
Baker wants the development of a brief list of factors that might influence financial advice, such as commissions. This list would be adopted by every dealer group and authorised representative and would be published on the front page of every financial services guide (FSG).
"Commission disclosure may be buried at the back of a large statement of advice...which the client was never intended to read," he said.
He also proposes a clearer differentiation between product sales people and financial advisers, an issue that is currently the subject of a federal government inquiry.
Baker said he has not reported the disclosure breaches to ASIC because he believes public debate on the issue would better drive regulatory change.
Gilbert said IFSA is conducting a six-month investigation into disclosure in the financial planning industry.
He said Baker's proposal to include a list of factors that might influence advice on the front page of an FSG is one of the points IFSA is examining in the project.
However, he said this idea competes with 'four or five' other advice-related issues that could also be included on the front page, such the cost of a financial product.
Gilbert said consumers also need to be better informed about the differences between boutique and institutional financial planners.
"The advantages and disadvantages of both need to be on the table," he said.
