REDUCING THE COST OF PROVIDING FINANCIAL ADVICE BY ALMOST 40 PER CENT
The Financial Services Council (FSC) White Paper on financial advice outlines the FSC’s platform to reduce the cost of advice and unnecessary regulation and duplication.
Timeline for reform of the financial advice sector
> Safe harbour steps abolished
> Code of Ethics amended
> Letter of Advice with scalable advice obligations introduced
> Statement of Advice and Record of Advice abolished
> Wholesale client asset test threshold increased and indexed
> Breach reporting framework revised
> Consult and clarify framework for licensees and advisers to support individual registration Regulatory Guidance to become more exemplary than prescriptive
> ASIC Advice Unit established
> Legislate personal advice and general information – abolish redundant terms and separate product from advice
> Update licensing and registration framework
> Introduction of a ‘practising certificate’
> Prior learning and equivalent pathways recognised
> Accreditation to be conducted by universities and Registered Training Organisations (RTOs) Commencement of principles-based regulatory framework
> Tax deductibility or rebate for all financial advice
> Self-regulation by the industry
> Principles-based regulatory framework fully implemented
> Increased role for professional bodies and industry standards
> Data standardisation
> Measures to enable financial advice providers to access consumer data
KPMG determined that the advice process costs $5334.64. Their analysis shows that should the FSC’s core recommendations (abolition of the safe harbour steps, introduction of a Letter of Advice, and relabeling of advice definitions) be fully implemented that:
– The cost of providing financial advice will be reduced by almost $2000 or by 35-37 per cent.
– Save financial advisers up to 32 per cent of their time when providing advice to clients.
– Allow advisers to provide advice to an additional 44 new clients each year.
– Time required to complete the advice process would reduce from 23.9 hours to under 16.8 hours per consumer, allowing advisers to focus on what they do best – support consumers.
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