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New Pricing Should Mean New PortfoliosA How To Book Of Self Managed Super FundsThe Power of Thought & Ageing. Part 2The Easiest way to do a Client NewsletterReally Caring - healthy confrontation about money issues with kidsWhy Warren Buffett won't buy a NewspaperThe Future of Financial AdviceEmail Marketing Business Opportunity - Helen Bairstow
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The Future of Financial Advice

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

The media has no doubt alerted you to the advice law changes announced by Chris Bowen the responsible Federal Minister.

What follows is a very quick summary of the changes (but much more detail than you may have heard about on radio or seen on TV).

The reforms are due to begin in July 2012.

Upfront commissions on all investment products will be banned. This new rule, at this stage, will not apply to risk insurance products.

Asset based fees can still be charged of the client agrees and only for the ungeared or investment amount. It's not completely clear if such a charge could be applied to super investments.

Soft dollar payments will not be banned but the Government will continue to examine this issue with a view to describing them adequately so that they can be banned.

Ongoing advice fees will only be allowed if a client has specifically agreed in advance for each year. Trail commissions will be banned.

Advice must be provided on fiduciary duty basis only. The government says that, "if the adviser cannot recommend a product that is in the best interests of the client from their own 'approved product list' (a list of products that their licensee has authorised them to sell), then the fiduciary duty may require them to search beyond the 'approved product list' or recommend that the client should see another adviser."

This is a significant reform and long overdue in my view.

The accountants exemption which allows them to provide advice in relation to Self Managed Super Funds will be removed.

Simple advice within the super fund environment will be "expanded" to include transition to retirement pensions, nomination of beneficiaries and retirement planning generally. This is a political decision.

Financial Services Guides (which are provided as soon as advice is provided) will have to be rewritten.

ASIC's powers will be expanded in how they regulate advisers. This is a good change as long as it's implemented effectively.

A professional standards panel will be established and its members will be widely selected from industry, academia, etc.

You can find further information on the Minister's website:

As you've no doubt gathered these are quite significant reforms. A couple of points. Firstly an election will be held. If the ALP wins a second term then we will most likely have another Minister or Ministers. If the Coalition win then the policy will simply be put into a holding pattern until the new Government decides what its priorities are.

In short there are many months and much lobbying before this policy is actually implemented.

Also as you're no doubt aware the Government will release the Henry Tax Review next Sunday. In reality the review document is not that important. What's relevant is the Government's response to it.

Finally please consider purchasing a copy of my book. You can look at the contents page at the following link:

Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link:

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This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.

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