Best practice urged on fee disclosure statements

February 11, 2014 AEST
Financial planning businesses – whether aligned or non-aligned – should continue investing in a fee disclosure statement regime, despite the provision being watered down by the government’s proposed changes to legislation.

Dealer groups and licensees have invested heavily in preparing for the new fee disclosure statement (FDS) regulation as part of the Future of Financial Advice (FoFA) reforms only for the scope to be limited by a government proposal late last year.

It is now likely that fee disclosure statements will only apply to new clients from when the legislation became law on 1 July 2013 rather than being completely retrospective.

However, financial planner Hans Egger, co-creator of the AstuteWheel, believes practices and their licensees can either embrace the opportunity to secure a return on their investments, or squander the chance.

“Planning practices spent a great deal of time, money and effort organising their client databases and polishing up their client value propositions in readiness for the FDS regime,” he said. “And, like a nation upgrading their infrastructure in preparation for a war that never eventuates, they can take advantage of perhaps the best organised office they have ever had, or waste the opportunity.”

In keeping with the military analogy, Egger suggests a “force-multiplier” in the use of technology to more efficiently and effectively conduct reviews.

“If you can increase the number of client reviews you conduct this year and provide your clients with a better appreciation of the value you offer them as an adviser, then not only will you have a stronger relationship with your clients but your revenue will also increase,” he said.

“Businesses should therefore take this opportunity to contact those clients who haven’t been reviewed for many years and identify ways to add value and broaden their services offering.”


Connect Financial Service Brokers CEO, Paul Tynan, called for a balanced approach and outcome to the Federal Government’s proposed changes to the FoFA legislation.

He noted that their objectives are basically the same with the end goal being a strong, viable, profitable industry to professionally service and support the financial, investment, retirement and protection needs of Australian consumers.

“Everyone has endorsed the new world of FoFA and the intended outcome of a fee transparent client focused infrastructure with a professional industry delivering goals based advice,” said Tynan.

“In my opinion, it’s not Government that’s the cause of the problems and complaints that have been directed towards FoFA but the overabundance of self interest groups lobbying intensely to ensure that the interests of their particular sector, company or association are met – even if above those of the industry or consumer.”

Tynan argued that there is little to be gained by pointing the finger of blame at government and the legislators when the real cause and root of all the problems is the industry itself.

“I am not naive and it’s there for all to see why all the special interest groups comprising institutions, advisers, associations, fund managers, etc have been so active through their lobbyists and lobbying activities – because Australia has a pool of retirement savings of $1.6 trillion plus in assets and has the fourth largest fund management industry in the world. So there’s a lot at stake.”

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