Stop calling product recommendations adviceBY JIM STACKPOOL | THURSDAY, 3 SEP 2020 12:01PM Would you regard a product recommendation from a Toyota dealer or Apple store as advice? Do you think bias makes a recommendation less valuable? Do you think it matters? Consider ... Upgrade your subscription to access this article
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I totally agree with this article and its about time we called this situation out as most clients just want advice on product and they do not want to pay for a Rolls Royce when all they need is a Toyota. This is at the very core of why financial advice is so expensive, because we are expected to identify every possible future need in preparing our advice. All we should be doing is to highlight potential situations that might arise in the future and leave it there.
Agree totally with the sentiments expressed above. The Corps Act 2001 sets out the definition of financial product advice (Sec 766B), but this was "conveniently" shortened to financial advice by ASIC in its plethora of regulatory guides regarding financial services.
Overlay that with the "let's cover every scenario" and our butts at the same time approach by legal teams employed by dealers, and you have the recipe for the train wreck we now have.
So, the regulatory body (ASIC) has to sort out the confusion that it has created. Then it has to communicate that "clearly, precisely and effectively" to all stakeholders.
The Hayne Royal Commission needs to be seen for what it was - the express train coming in the opposite direction contributing to the train wreck.
Please don't run away with the idea that advisers are to blame here. Mostly they are only doing what they are told. What we need is to get back to basics. Financial product advice is exactly that. That's what is regulated. Financial advice is not defined in the Corps Act, and nor should it be. It is part and parcel of the every day job of accountants and financial counsellors, as well as those who provide financial product advice.
Very, very frustrating for those of us at the coal face.
ASIC, Hayne Royal commission and FASEA are the main hindrance to the financial advice area going forward.
A simplified and clear expectation model would solve most of the problems in this industry.
Instead we have a complex and over regulated industry with experienced advisers leaving with few new entrants.
Everytime you get lawyers involved (Hayne Royal commission) you run the risk of an unworkable and un-affordable outcome.