A website is a major marketing asset, as it is your firm’s main digital shopfront. Yet many businesses either ignore their website or haven’t bothered to build one.

Most financial planning operations do have a website but it can be a challenge to determine whether it’s creating value. In my book, regardless of whether you’re launching or rebuilding a site, there are a several issues to consider that will help maximise the value of your online presence.

Be clear about the primary function of a website

This might sound straightforward but many owners don’t take the time to consider what a website can accomplish. Lead generation is a common goal. The aim is to attract potential clients so they can learn more about your firm’s offerings and decide either to contact you or make a purchase. If these are your goals, then you’ve determined the website’s primary function, and you must endeavour to build your content accordingly.

Identify how your clients will use the site

Once you understand the purpose of your website, you’re well-placed to map out paths clients will take on it. In other words, you can take a visitor by the hand, virtually, when they land on your homepage. To do this effectively, you must put yourself in the shoes of financial planning clients. If you’re targeting young professionals seeking to build wealth, think about how easy it is for them to find relevant information. Review the menus, the landing page, the page layouts, and whether the website is easy to navigate.

This is a valuable exercise that forces you to focus on the new visitor experience. Given people’s attention spans are at an all-time low, it must be easy and pain-free to navigate your website. Likewise, hiding information under multiple headings isn’t a practical approach. If headings are ambiguous to new visitors, they’ll simply give up and move to your competitors’ sites.

Your marketing messages should govern the content delivered on the site. Messaging on the website should align with the rest of your sales and marketing content. If there are inconsistencies, then you have a problem.

Unless you’re a web developer, don’t go it alone

There are many basic web design packages available for do-it-yourself design. Wix is a good example. However, unless you’re competent with web development/design, marketing, copy creation, content marketing, search engine optimisation, search engine marketing, and a host of other areas, I would engage a website professional.

By the same token, you don’t have to spend a fortune building or renovating a website. There are literally hundreds of developers working on common Content Management Systems (CMS) such as WordPress. To find the right website professional for your business, don’t be afraid to seek recommendations from colleagues and friends.

Finally, be sure to use a standard CMS platform such as WordPress or Joomla. There are many developers using these platforms, which means you will be able to make changes to your website or design team in the future without too much stress.

Education and housing affordability have dominated budget headlines in recent weeks and we’re starting to get a picture of what levers Treasurer Scott Morrison will pull, partly thanks to what’s been ruled out.

Last year’s surprise super changes had planners’ phones ringing off the hook the Wednesday following the announcement. While there may still be a few surprises in store, here’s a quick round-up of the measures that have been floated so far that may affect your clients.

Housing

Changes to negative gearing have been ruled out, but there are several other measures to improve affordability that we are likely to hear more about.

A bond aggregation scheme to encourage private investment in community housing is likely to be detailed on Tuesday, while a salary sacrifice-type proposal to allow first-home buyers to move allocated pre-tax income into savings has been heavily speculated upon. Letting prospective home buyers dip directly into super to buy property has been ruled out; however, there may be incentives for older Australians to downsize their homes to increase supply.

Tax

The Turnbull Government has made clear it’s looking at ways to end the cash economy, so we may see something on that on Tuesday night.

Work expenses are also under the spotlight, but some pundits have suggested the $20,000 instant asset write-off is being reviewed for extension. The 2 per cent levy for high-income earners has hit its expiration date and there are few indications it will be extended.

While it’s unlikely there will be many measures to discourage investment, the capital gains tax discount may be reduced.

Education

While schools are set to get an additional $19 billion in funding over the next 10 years – which the government says will leave the vast majority better off – university students will have to pay an extra $3600 for a four-year degree. The income threshold for paying back higher-education debt will also be reduced, from almost $55,000 to $42,000.

What else?

Other measures that have been mooted include:

• An increase in infrastructure spending
• Greater attention to welfare allocation
• Changes to the Pharmaceutical Benefits Scheme
• An update on multinational tax avoidance
• New body for handling financial complaints, expected to be a hybrid of the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.

Professional Planner will keep you updated about the federal budget as information comes to hand, with expert commentary and industry reaction.

Milliman, Inc., a premier global consulting and actuarial firm, today released comprehensive new research analyzing the current and future state of the retirement income market in the Asia-Pacific region. The report is based on a survey of over 100 insurance companies and financial institutions across eight countries. The results, along with case-studies and in-depth analysis, provide insight into the economic and regulatory factors most affecting Asian retirement income markets, including consumer demand, product development, and opportunities for growth in the industry.

“Across Asia-Pacific, there is the potential for private market providers to complement and fill gaps that exist from government sponsored retirement systems and employer-sponsored pension arrangements,” said Richard Holloway, managing director for Milliman’s South East Asia and India life consulting practice. “With this report we’re able to gain valuable insight into opportunities that may exist, on a country-by-country basis, and offer perspectives on ways to capitalize.”

“Technology advancements have now made it possible for financial institutions to provide consumers with tailored investment strategies and product solutions to achieve their goals in retirement. The development of robo-advice has begun to gain traction in the superannuation industry in Australia, and we expect the same to occur in Asia in the near future,” said Milliman Australia practice leader Wade Matterson.

Key findings from the report include:

• The vast majority of respondents feel their national retirement systems’ provisions are inadequate – even those traditionally considered to have more advanced systems such as Singapore and Australia.
• Regarding the most important features in a retirement income product, respondents feel consumers would value some type of guarantee, either income or capital protection, with simplicity being a consistent third across most countries.
• When it comes to financial advice, over 60% of participants felt financial advice was needed but 63% cited cost as the primary impediment for consumers.

SOURCE: Milliman

VanEck is pleased to announce that it has partnered with Lonsec Investment Solutions Pty Ltd (Lonsec) to launch a range of ETF model portfolios. VanEck ETF Model Portfolios are designed for advisers and brokers to assist in the construction of simple and cost effective diversified portfolios that can be used as the foundation to help meet their client’s investment objectives.

VanEck ETF Model Portfolios draw on Lonsec’s established research and portfolio construction expertise to provide recommended strategic asset allocations tailored to three risk/return profiles: Balanced, Growth and High Growth. Each model portfolio has been developed to meet the needs of a range of investor risk profiles and investment objectives. All ETFs included in the models must have a minimum ‘Lonsec Recommended rating’ with ongoing independent oversight by Lonsec and quarterly performance reporting.

Arian Neiron, Managing Director, VanEck Australia said, “We are delighted to partner with Lonsec Investment Solutions who has over 20 years’ experience in strategic asset allocation. We believe the new VanEck ETF Model Portfolios will provide financial advisers with a set of tools to build cost effective and diversified investment portfolios to help meet the needs of their clients across a range of risk profiles.

“Over the past decade, the investment industry has experienced a rapidly changing environment, with turbulent markets, changes in regulation and evolving technology. As a result, clients are scrutinising their investments more closely in search of performance, value and transparency in an increasingly cost conscious world. Our ETF model portfolios are designed to address these factors and provide a reliable, low cost investment framework for investors,” Mr Neiron said.                                                

Each VanEck ETF Model Portfolio provides broad market exposure across asset classes including Australian equities, global equities, property, Australian fixed income and international fixed income. Utilising ETF strategies provides simple broad market exposure for considerably less cost than the average cost of Australian managed funds.

Lukasz de Pourbaix, Chief Investment Officer, Lonsec Investment Solutions, said, “We are pleased to partner with VanEck to provide a range of diversified ETF model portfolios. The model portfolios leverage Lonsec’s strategic asset allocation and research expertise providing advisers with a range of relatively low cost portfolio solutions across various risk profiles,” Mr de Pourbaix said.

To view VanEck ETF Model Portfolios click here.

SOURCE: VanEck

BT Financial Group (BTFG) has contributed $397 million in cash earnings to the Westpac Group result – a decrease of 11% per cent on the prior corresponding period.

The result was affected by margin compression from Accrued Default Amounts (ADA) superannuation migrations, competition for flows and significant General Insurance claims increase from Cyclone Debbie and the Sydney hail storms.

Chief Executive Brad Cooper said BTFG was operating in a challenging environment but had achieved significant strategic milestones across the business.

“This half we delivered a step-change in managing clients’ superannuation, SMSFs and investments with the integration of superannuation and insurance on BT Panorama,” Mr Cooper said.

“This was a crucial milestone in the build of BT Panorama as advisers now have an end-to-end solution to manage all of their clients’ financial needs no matter their product structure.

“Our funds management businesses had positive flows, maintaining its number one market share position on all retail platforms.”

BTFG’s Life insurance business remains a standout industry performer with cash earnings up 15% and lapse rates remain industry leading.

“Over the period our Life business was once again awarded as a standout, awarded Life company of the year for the second consecutive year* and recognised by IRESS as having the highest quality Life cover. 3

“We are exceptionally proud of our Life business, its high quality product, its intense focus on our customer gives us better retention and materially lower lapse rates than our competitors,” he said.

Mr Cooper said wealth management remained an integral part of helping Australians prepare for their best financial futures and he was confident of the long term opportunity.

“Australians want help in how do I buy a home, educate the kids, accumulate assets and protect them and, importantly, save for and invest to ensure that you can live a dignified life in retirement,” he said.

Full Year performance highlights

 Our funds management businesses had positive flows, maintaining their number one market share position on all retail platforms

 Funds Under Management up 19%

 Market leading FUA growth of 4% on the half and 11% on the year, $6B and $13B respectively

 Foundation for Panorama to now exceed $4.3bn in Funds Under Administration

SOURCE: BT Financial Group

Vanguard Australia announced today that Johanna Platt will join the company’s
executive team as Chief Financial Officer.
Ms Platt is an experienced finance leader who will join Vanguard from Iron Mountain, a global leader in information
management where she currently holds the role of Chief Financial Officer, Australia and New Zealand. She has
more than 20 years of experience working in organisations across the consumer goods, logistics and retail sectors.
Ms Platt is a Certified Practicing Accountant, with a Bachelor of Chemical Engineering from the University of
Sydney and a Masters of Business Administration from the Melbourne Business School.
Commenting on the appointment Vanguard’s Australia Managing Director Colin Kelton said:
“Johanna brings valuable experience to Vanguard Australia at a time when our sustained growth sees us serving
an increasing number of investors across all market segments.
“We look forward to welcoming her to Vanguard, and seeing the finance division continue to focus on exceptional
stewardship of our clients’ investments under her leadership,” Mr Kelton said.
Commencing in the role mid-year, Ms Platt will lead Vanguard’s finance division which has responsibility for
financial operations at both a management and statutory level, as well as having oversight of the fund accounting,
administration and transfer agency services for Vanguard Australia’s managed funds and separately managed
accounts.
Ms Platt replaces Daniel Shrimski who moved to Vanguard’s US based headquarters earlier this year to take up
the role of CFO for the US Retail Investor Group.

SOURCE: Vanguard Australia

Bennelong Funds Management has appointed Stuart Fechner as director, retail research relationships, effective from May 2017 and reporting to Jonas Daly, head of wholesale sales at Bennelong.

In the newly created role, Mr Fechner will be responsible for the day-to-day contact and support to retail fund researchers and asset consultants.  He will also act as an investment specialist on behalf of Bennelong’s boutique fund manager partners.

Mr Daly said that Mr Fechner’s extensive track record in both pure research and distribution roles was particularly attractive to Bennelong.

“Stuart brings a particular mix of experience to the role, combining an in-depth understanding of the research house rating process with portfolio construction knowledge and the ability to articulate our fund managers’ investment process and philosophies.

“As Bennelong continues to grow and looks to form additional boutique fund manager partnerships, building in-depth relationships with researchers and asset consultants, as well as other intermediaries, will become increasingly important,” Mr Daly said.

Mr Fechner joins Bennelong from AMP Capital where he was state account manager – Victoria & Tasmania.  Prior to this he held a range of business development and research roles at MLC (previously Aviva) and was also a research analyst at Advisor Investment Services.  He holds a bachelor of economics from Latrobe University and a graduate diploma in management from Deakin University.

SOURCE: Bennelong Funds Management 

Graham McDonald knows only too well that there are two sides to every story. The newly appointed chair of the Financial Planning Association’s Conduct Review Commission says that whenever there is a disciplinary matter to be heard, it’s not always only clients who may have lost money who are affected.

McDonald is a former presidential member of the Administrative Appeals Tribunal (AAT). He was also the first banking ombudsman and a former chair of the Superannuation Complaints Tribunal (SCT). He says it’s not the role of the CRC to expel every financial planner who comes before it, but rather to ensure that ethical and professional standards are maintained.

Sanctions available to the CRC include directing FPA members to undertake further education or training, reprimands, fines and suspension of designations (including Certified Financial Planner). The FPA publishes a list of CRC actions and determinations against members. McDonald says expulsion is, and must be, a last resort.

“The last thing I want it to be seen as is a punishment thing,” McDonald says. “That’s not what it is. It is there to support the industry, rather than to be something that’s judgemental of the industry.”

McDonald says that in his role at the AAT he heard a number of cases of financial planners appealing decisions against them by the Australian Securities and Investments Commission (ASIC)

He says a particularly memorable case concerned a financial planner whose clients had lost money in the collapse of Westpoint, and who had been disqualified by ASIC as a result. The planner lived and worked in a regional area, and his clients, which included farmers and local businesses, were inevitably also his friends, as well as members of his own family.

“So it wasn’t just an entirely professional relationship,” McDonald says. “When Westpoint went under, they lost their investments, including their homes, and he had put his own money into it as well. He felt really bad about this.”

McDonald says that as the appeal hearing progressed, it became clear that the financial planner had been contemplating suicide. He says timely intervention ensured that the financial planner was looked after. But he adds that it is “something that stuck with me”.

Higher stakes for the industry

“There are two sides to the coin,” he says. “One is the investors who lose their money, and the other is the effect on the planners who are giving advice.”

McDonald says a number of cases before the AAT made it clear that financial planners needed to be held to higher standards “to better understand what they were recommending”.

He says the sheer volume of money now invested in superannuation funds and the demand for professional financial advice means the development and enforcement of education, professional and ethical standards “clearly has become more important”.

“It’s in those cases where financial planners have not complied with basic principles [that] there’s a question of how they are to be dealt with in something that’s an emerging profession,” McDonald says. “When you look at all the other professions, they have strong self-regulatory bodies, and it’s essential that financial planning have that as well.

“That’s not to say [the CRC’s] role is to punish people. It’s to see that education and professional standards are protected and maintained.”

McDonald says he expects the CRC to have a close working relationship with the new Financial Adviser Standards and Ethics Authority (FASEA) to ensure the standards that FASEA sets are observed in practice and in principle by FPA members.

McDonald will serve as independent code administrator, to oversee compliance with the FPA’s Professional Ongoing Fees Code by those FPA members who choose to comply with the code instead of the opt-in provisions of the Future of Financial Advice (FoFA) legislation.

McDonald’s appointment was announced jointly with that of deputy CRC chair Dale Boucher, who is a former chairman of the Tax Practitioners Board and a former Australian Government solicitor.

Both appointments are part of the FPA’s push to be approved under new legislation as a code monitoring body, with responsibility for ensuring its members’ compliance with the industry-wide code of ethics to be developed by FASEA under the Corporations Amendment (Professional Standards of Financial Advisers) legislation.

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It is good to under-promise and over-deliver. Markets, in particular, respond favourably when things turn out better than expected. That, however, is not Donald Trump’s style. He has never knowingly undersold himself.

Ever since President Franklin Roosevelt’s first 100 days in office, in which the Depression-era leader initiated 15 milestone pieces of legislation, the roll-call of achievement in the first three months has become the benchmark of a president’s early success. Having published a list of 10 measures that he would implement in his own first 100 days, which ended on Saturday, President Trump cannot be surprised that he is now being judged on his performance against those campaign promises.

This matters to investors just as much as voters because Trump’s arrival in the White House galvanised financial markets with his promises to cut red tape, reform taxes and spend heavily on infrastructure. Between Election Day and the end of 2016, the S&P 500 Index rose by 5 per cent. By Trump’s inauguration in January, it was 6 per cent higher and by the end of February it had risen 12 per cent. Since then, however, the market has moved sideways. The Trump bump is in danger of morphing into a Trump slump if the new president doesn’t start to deliver.

Broken contract with America

So what is the scorecard for Trump’s first 100 days? He published a “Contract with the American Voter” in October, making it a simple enough test to undertake. Trump’s self-proclaimed “100-day action plan to Make America Great Again” laid out precisely how he should be evaluated. On that basis, he scores, if you’re feeling generous, 1 out of 10.

Six months ago, he promised America he would: cut taxes; prevent companies moving offshore; start a $1 trillion infrastructure spending plan; provide more school choice; repeal Obamacare; make childcare and caring for the aged tax deductible; end illegal immigration with a wall along the Mexican border; stop violent crime; boost the military and, as he put it, drain the swamp.

Of these, he has come closest on healthcare reform, in as much as a plan has been introduced and has passed the lower house of Congress. However, its chances for passing the Senate in any form are still slim. On the two issues that matter most to sharemarket investors – tax reform and infrastructure spending – there is even less to show.

The tax reform road-map was thin on detail and even sketchier on how it would be funded. The principal idea, reducing the headline rate of corporation tax and simplifying personal taxes, is market-positive on its face. But with no hint of how it might be paid for, and America already $19 trillion in debt, there is next to no chance of the plan getting past the deficit hawks in Congress. Even if it does, the inflationary growth in borrowings it implies would merely trigger a more aggressive rate-tightening cycle from the Federal Reserve.

As for the infrastructure spending plans, Trump is fast running out of time. Building highways, airports, bridges and the like does not happen overnight and with a 40 per cent approval rating (much lower than recent presidents at the same juncture) there can be no guarantee that he will have the luxury of eight years in which to deliver these long-gestation projects.

What’s next

This is not to say the president has not been busy. He has signed nearly 30 other pieces of legislation and about the same number of executive orders. But these are just expressions of intent or reversals of measures the previous administration put into place. These make up the easy part of being president. The genius of the US presidential system is that it makes it hard for a maverick in the White House to do too much damage. It is working as the Founding Fathers hoped it would.

So if the past 100 days have been a disappointment for investors, what might the next 100 hold? There is an old adage that recommends investors “sell in May and don’t come back ’til St Leger Day”. Depending on when in May you choose to bail out of the market, it’s about 100 days until the horse race in September that ends the summer doldrums, according to this bit of market lore.

There is some evidence that markets do indeed perform better on average during the winter months than they do in the summer. Since 1970, the average gain for the S&P 500 Index between November and April has been nearly 9 per cent, while in the warmer months in the US, from May to October, it has been less than 3 per cent.

That is not the same thing as saying the market falls on average over the summer. If you are passing up the opportunity to make 3 per cent, on average, over a six-month period you need to find an alternative for your savings. Neither cash nor bonds will match that return at the moment. This comparison also disregards the trading costs involved in moving in and out of the market wholesale twice a year.

Another reason to disregard the ‘sell in May’ adage is that investors don’t trade in averages. For selling in May to be a useful strategy to investors it would need to be predictable. Our research into the past 20 years shows that, for the UK market, taking the summer off would have made sense exactly half the time. Sell in May worked in 10 years and failed in the other 10. It’s a coin toss.

The reality is that 100 days is too short a period from which to draw any meaningful conclusions, whether political or financial. But in investment, as much as in politics, under-promising and over-delivering is the best combination. Hopefully, expectations are low enough to provide that positive surprise this summer.

Tom Stevenson is investment director of Fidelity International.

The government has unveiled a scheme to allow the withdrawal of voluntary personal contributions from superannuation to get on the property ladder. But it has stopped short of allowing workers early access to the compulsory super that employers pay on their behalf for a deposit on a first home.

It is one of a handful of initiatives unveiled in the 2017-18 budget on May 9 that the government is selling as measures to improve housing affordability. Related changes are targeted at removing barriers for older homeowners wishing to downsize, and encouraging more institutional investment in affordable housing.

From July 1, 2017, first-home buyers will be allowed early access to voluntary super contributions made after that date. Those contributions will be deemed earnings eligible to be withdrawn after July 1, 2018, to put towards a deposit on a home.

Contributions will be capped at $15,000 a year, and at $30,000 total over an individual’s lifetime. Contributions to a fund each year must, in total, remain under the individual’s contributions cap.

Contributions plus deemed earnings may be withdrawn any time after July 1, 2018, and will be taxed at the individual’s marginal rate, minus a 30 per cent offset.

How it will work

A fact sheet released by Treasury states that the amount of earnings that can be released via the so-called first-home super saver scheme will be “calculated using a deemed rate of return based on the 90-day bank bill rate, plus three percentage points
(as per the Shortfall Interest Charge)”.

The fact sheet also states that non-concessional contributions can be made under the scheme.

“While these contributions will not benefit from a tax concession, earnings on these contributions will benefit from the concessional rate of tax in superannuation and the higher returns often realised inside superannuation,” the fact sheet states. “When non-concessional amounts are withdrawn, they will not be taxed.”

It is understood that the deeming rate will be used to set an upper limit on how much can be withdrawn from a fund, and that if the value of a fund’s assets were to fall after an individual makes a contribution, the fund will not be required to pay out money it does not have.

It is also understood that the government chose this approach in part because it was the simplest to implement and is not expected to significantly increase the administrative burden on funds themselves.

The Australian Taxation Office will receive additional funding of $9.4 million to implement the scheme, which will include ensuring fund members are indeed first-home buyers, and that the funds withdrawn under the scheme are used to buy a home. This measure is expected to consume about $250 million in the budget over the four-year forward estimates period.

Encouragement for downsizers

From July 1, 2018, individuals aged over 65 will be able to make non-concessional contributions of up to $300,000 from the proceeds of selling a home and downsizing.

A downsizer contribution will be allowed in addition to contributions now allowed under existing rules and caps. It will be exempt from the age test, the work test and the $1.6 million transfer balance cap for non-concessional contributions. However, a fact sheet states that “any change in the person’s superannuation balance as a result of this measure will count towards the age pension assets test”.

At a press conference inside Parliament House in Canberra, Treasurer Scott Morrison said the $300,000 figure is one the budget can afford, and that it will be up to each individual to consider whether the additional contribution and pension payments are an acceptable trade-off for losing pension entitlements.

The budget papers state that the downsizer measure will “apply to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage of this measure for the same home”.

Allowing proceeds in this way will remove a considerable barrier for older people selling a property and “may enable more effective use of the housing stock by freeing up larger homes for younger, growing families”, the papers state.

The broader package designed to address housing affordability also includes allowing managed investment trusts (MITs) to invest in affordable housing, provided it is made available for rentals for at least 10 years and the MIT derives at least 80 per cent of its revenue from investment in affordable housing. Withholding tax penalties will apply where an MIT breaches these requirements.

How the first-home super saver scheme works

Michelle earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she annually directs $10,000 of pre-tax income into her superannuation account, increasing her balance by $8500 after her fund has paid the contributions tax. After three years, she is able to withdraw $27,380 of contributions and deemed earnings on those contributions. Her withdrawal is taxed at her marginal rate (including Medicare levy) less a 30 per cent offset. After paying $1620 of withdrawal tax, she has $25,760 that she can use for her deposit. Michelle has saved about $6240 more for a deposit than if she had saved in a standard deposit account.

Michelle’s partner, Nick, has the same income and also salary sacrifices $10,000 annually to superannuation over the same period. Together, they have $51,520 that they can put towards a deposit, $12,480 more than if they had saved in a standard deposit account.

Source: Budget Fact Sheet 1.4

Bank executives could have their bonuses clawed back and be disqualified from working as a bank executive under new Australian Prudential Regulation Authority powers the Treasurer says will increase accountability.

As part of the government’s efforts to create “a fairer banking deal” for all Australians, several regulators and professional bodies will be given increased oversight. The Financial Adviser Standards and Ethics Authority (FASEA) emerged as a key part of the overall package.

A publication accompanying the budget papers, Guaranteeing the Essentials for Australians, names the body for raising professional standards of financial advisers – alongside the new Australian Financial Complaints Authority (AFCA) and an industry funding model for the Australian Securities and Investments Commission (ASIC) – as key measures for delivering “a better and fairer deal for consumers and businesses” from banks. FASEA and the AFCA also will be funded by industry.

Banks have been hit on multiple fronts, including a levy on approved deposit-taking institutions (ADIs) with liabilities of more than $100 billion, and the range of measures to address the accountability and responsibilities of senior bank executives.

ASIC has previously floated the idea of making bank executives accountable for the behaviour and action of the financial planners in their networks, and while the budget proposals don’t do that exactly, they do require senior bank executives to register with APRA, and they can then be disqualified.

The Treasurer, Scott Morrison, told a press conference inside the budget lock-up that disqualification would mean an executive could not be employed by another bank, and that in some cases an executive’s bonuses could be clawed back.

It won’t be ASIC but APRA that will be funded and given powers to remove and disqualify bank executives, require banks to make adjustments to remuneration policies where necessary, and “enforce new obligations on bank conduct”. These include penalties of up to $200 million for large ADIs and $50 million for smaller ADIs that fail to meet those obligations.

A minimum of 40 per cent of an executive’s variable remuneration – 60 per cent for certain executives, such as the CEO – will have to be deferred for a minimum of four years, to encourage a focus on long-term decision-making.

The budget papers state the levy of 6 basis points on banks with liabilities above $100 billion, is “a fair contribution to the community from our major banks, is consistent with other advanced countries and helps foster competition from smaller banks”.

Morrison said the Australian Competition and Consumer Commission will monitor banks the levy affects to ensure that additional costs are not disguised and passed on to consumers. The ACCC will also have a permanent role in monitoring ongoing competition in the banking sector.

The government has gone ahead with plans to merge three complaint resolution organisations to create a one-stop shop for the financial services industry.

From July 1, 2018, the Australian Financial Complaints Authority (AFCA) will replace the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal (SCT) and the Credit and Investments Ombudsman.

The new body will give retail investors, financial services consumers and small businesses access to a free and binding (on Australian financial services licensees) resolution scheme.

AFCA members will be required to report to the Australian Securities and Investments Commission (ASIC) on the results of internal dispute resolution efforts.

A review of the existing dispute resolution framework, by professor Ian Ramsay, recommended that disputes the resolution body received first be referred back for internal resolution, and that the external body should have the power to monitor progress and intervene when resolution is taking too long. The government has adopted this resolution.

The AFCA will have higher limits on the value of disputes it can hear and the compensation it can award.

The Ramsay Review also recommended a single external resolution body for all financial disputes and that it have the capacity to hear disputes of up to $1 million, with a compensation cap of $500,000 for disputes other than those involving superannuation. It recommended continued “unlimited monetary jurisdiction” for superannuation disputes.

A budget fact sheet provides the example of a small business dispute valued at $5 million being resolved by AFCA, which awards the complainant compensation of $1 million.

As under the old external dispute resolution model, AFCA will be funded by industry, via levies.

ASIC will receive additional funding of $4.3 million over four years, from 2017-18, to develop mechanisms for the reporting of internal dispute resolution. This will be offset by an increase of $3.6 million over three years, from 2018-19, under ASIC’s Industry Funding Model, and also by a reduction in funding as the SCT winds down.

The wind-down of the SCT will also lead to a reduction in the Australian Prudential Regulation Authority’s Financial Institutions Supervisory Levies, which superannuation funds pay.

The Turnbull government has moved to crackdown on the amount of debt SMSFs take on to invest in property by including the leverage in their superannuation balance and transfer caps. 

About $24 billion in SMSF assets are subject to LRBA arrangements, accounting for about 3.4 per cent of all SMSF assets.

The government says SMSF members can use LRBAs to get around contribution caps and, in effect, transfer growth in assets from the accumulation phase into the pension phase without triggering the $1.6 million transfer balance cap.

The budget papers state that the outstanding balance of an LRBA will now be “included in a member’s annual total superannuation balance and the repayment of the principal and interest of an LRBA from a member’s accumulation account will be a credit in the member’s transfer balance account”.

The papers state this measure will make sure that the 2016-17 Superannuation Reform Package does what it is supposed to – as will measures announced to address related-party transactions.

The budget papers also state that the government will move to reduce incidences of fund members using related-party transactions on non-commercial terms to avoid costs and increase superannuation savings. Also, non-arm’s length income provisions will be amended to include “expenses that would normally apply in a commercial transaction” when considering whether a transaction is on a commercial basis. The changes are designed to limit the ability of friends and family members to make deals that skirt the tax laws.

Together, the LRBA and related-party transaction measures will add $24 million to revenue.

Members of SMSFs will potentially benefit from measures introduced to improve housing affordability, which allow contributions of up to $300,000 to superannuation from the proceeds of selling a home and downsizing.

The downsizer contribution will be allowed in addition to contributions currently allowed under existing rules and caps, and will be exempt from the age test, the work test and the $1.6 million balance cap for making non-concessional contributions. However, a budget fact sheet states: “Any change in the person’s superannuation balance as a result of this measure will count towards the age pension assets test.”

It was a recommendation of the 2014 Financial System Inquiry that the government outright ban all borrowing within superannuation, which the inquiry’s chair David Murray has argued has the potential to become a systemic risk. The Turnbull government rejected this recommendation. 

The Australian Securities and Investments Commission will receive additional funding to ensure the new one-stop external dispute resolution body, the Australian Financial Complaints Authority, delivers an effective service, and to further promote financial literacy.

The budget papers show ASIC will receive $4.3 million over four years for its work with AFCA, and $16 million over four years to promote financial literacy.

The AFCA cost to the budget will be offset by an increase in levies of $3.6 million over three years, from 2018-19, under ASIC’s Industry Funding Model. The cost of promoting financial literacy will be partially offset by an increase of $12 million over four years in the statutory levy amount received from entities ASIC regulates.

Charges recovered from ASIC-regulated entities will also offset an increase in funding to implement and monitor an extension of the Crowd-Sourced Equity Framework to proprietary companies. CSEF is an online fundraising mechanism that allows individuals to commit small sums to companies in return for equity.

The budget papers show that, in total, the government will recover about $113 million over the forward estimates from all entities ASIC regulates, through a statutory levy that takes effect from July 1 this year. The statutory levy will recover costs associated with:

• the promotion of financial literacy

• the administration of unclaimed money

• the operation of the North Queensland Insurance Aggregator 


• activities funded by ASIC’s Enforcement Special Account.

The budget papers state that, in line with a measure announced in 2016-17, this will ensure that all of ASIC’s regulatory costs are “recovered from those entities that create the need for regulation”.

Super

From the Treasurer, Scott Morrison:

On the demand side, for those who are trying to save to buy their first home, we will support them by providing a tax cut on their first home deposit savings.

First home buyers will be able to save for a deposit by salary sacrificing into their superannuation account over and above their compulsory superannuation contribution from July 1.

The First Home Super Savers Scheme will attract the tax advantages of superannuation. Contributions and earnings will be taxed at 15 per cent, rather than marginal rates, and withdrawals will be taxed at their marginal rate, less 30 percentage points.

Savers will not have to set up another account, they can just use their existing super account and decide how much of their income they want to put aside to save for their first home deposit.

Contributions will be limited to $30,000 per person in total and $15,000 per year.

Under this plan, most first home savers will be able accelerate their savings by at least 30 per cent.

We will encourage older Australians to free up housing stock, by enabling downsizers over the age of 65 to make a non-concessional contribution of up to $300,000 into their superannuation fund from the proceeds of the sale of their principal home.

And on demand management, we will continue to prefer the scalpel to the chainsaw, to avoid a housing shock.

Mum and dad investors will continue to be able to use negative gearing, supporting the supply of rental housing and placing downward pressure on rents. FULL SPEECH

The Financial Planning Association of Australia (FPA) welcomed measures to encourage older property owners to downsize in the Federal Budget, but cited concerns with increased complexity to the superannuation system.

FPA CEO Dante De Gori CFP® said: “A person aged 65 or over will be able to make a non-concessional contribution to superannuation of up to $300,000 from the proceeds of selling their home from 1 July 2018.

“The aim of this incentive is to encourage the baby boomer generation to sell, freeing up larger houses for younger families upgrading into more suitable homes. We support this initiative, however these changes add to the complexity of the superannuation system and are only tinkering with the housing affordability problem.”

First home buyers will be able to withdraw voluntary contributions to superannuation made from 1 July 2017, along with associated deemed earnings, for a first home deposit.    Under the measure, up to $15,000 per year and $30,000 in total can be contributed, within existing caps. Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30 per cent offset. Both members of a couple can take advantage of this measure to buy their first home together.

While the FPA supports initiatives to make housing more affordable, the association says accessing super is not the solution to the housing affordability issue, and is not in the national interest.

“Our members, who provide advice to millions of Australians, are concerned that changes that reduce retirement savings of future retirees, will only add extra pressure on the age pension.” FULL STATEMENT

The SMSF Association similarly supported the downsizing and first-home buyer announcements.

On downsizing, SMSFA CEO John Maroney said: “This means people can make a significant top-up contribution to their super funds, allowing them to fund a dignified and secure retirement. While the measure may not be a significant trigger to encourage downsizing, we welcome the ability for older Australians to top up their superannuation where downsizing their home provides them with funds to do so.”

On the first-home buyer scheme, he said: “This scheme offers superannuation funds, including the SMSF sector, an excellent opportunity to engage younger fund members in their superannuation.” FULL STATEMENT

The Association of Superannuation Funds of Australia (ASFA) was pleased with both the downsizing concessions for retirees and the first-home buyer super scheme.

“There will be some retirees who want to move to more suitable housing or put money aside from selling the family home to cover essential living or health care costs. This measure can improve flexibility and living standards in retirement, while boosting supply of family homes.”

Dr Fahy said a new first home super saver scheme would enable voluntary contributions to super and associated deemed earnings from 1 July 2017 to be withdrawn for a first home deposit.

“One potential benefit of this policy is that it will encourage young Australians to engage with their super earlier in life,” he said. FULL STATEMENT

The Actuaries Institute said it was pleased super announcements were broadly supportive of a  self-funded retirement.  “Overall the Federal Government has continued down the path of encouraging people to save for their own retirement, with few changes this year after major policy announcements in the 2016-17 Budget,” said Institute President Jenny Lyon. FULL STATEMENT

The Property Investment Professionals of Australia (PIPA) was broadly supportive of the housing affordability package, particularly the fact the government did not make changes to negative gearing or capital gains tax.

“We think it is an improving and sensible approach to stabilise the housing market. These measures also give confidence to people who invest in property to provide rental housing and to their family in terms of future financial wellbeing,” PIPA chair Ben Kingsley said.  

But Mortgage Choice said the measures would not address the affordability crisis.

“Anyone expecting a ‘big bang’ from the 2017-18 Federal Budget in terms of addressing housing affordability, will have been left sorely disappointed,” Mortgage Choice chief executive officer John Flavell said. “There were no silver bullets, no truly substantive changes, just an ineffective spray of pops and fizzles.

Stockspot warned the first-home buyer scheme could put young buyers at risk if the market turns.

“Tax concessions within super to encourage young people buy property geared to the eyeballs at this point in the cycle is crazy. The average Sydney property price would only need to fall by 3 per cent to wipe out the entire $30,000 saved from the First Home Super Savers Scheme,” CEO Chris Brycki said.

Banking measures

From the Treasurer, Scott Morrison:

For the system to be fairer, there needs to be greater competition and accountability – now.

In response to the Ramsay Review, we are establishing a simpler, more accessible and more affordable one-stop shop for Australians to resolve their disputes and obtain binding outcomes from the banks and other financial institutions, to be known as the Australian Financial Complaints Authority.

A new Banking Executive Accountability Regime will be introduced, requiring all senior executives to be registered with APRA. If in breach, they can be deregistered and disqualified from holding executive positions, and be stripped of their significant bonuses.

Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements.

If banks breach misconduct rules, they will also face bigger fines starting at $50 million for small banks and $200 million for large banks.

As recommended by the Coleman Committee, a permanent team will be established within the ACCC to investigate competition in our banking and financial system.

The introduction of an open banking regime in 2018 will give customers greater access to their own data, empowering them to seek out better and cheaper services.

Tonight, I also announce a new six-basis point levy on the big banks’ liabilities, starting on July 1.

This represents an additional and fair contribution from our major banks, is similar to measures imposed in other advanced countries, and will even up the playing field for smaller banks.

The levy will only affect our five largest banks with assessed liabilities of $100 billion or more and does not apply to superannuation funds or insurance companies.

Importantly, customer deposits of less than $250,000 and additional capital requirements imposed on the banks by regulatory authorities are excluded from their assessed liabilities.

Unlike the previous bank deposit tax, this is specifically not a levy on pensioners’ and others’ ordinary deposit accounts, nor is it on home loans.

This measure will secure $6.2 billion over the Budget and forward estimates to support budget repair, including the reversal of significant budget savings measures. FULL SPEECH

From the industry:

The Association of Financial Advisers (AFA) is pleased to see the Government introduce a Banking Executive Accountability Regime impacting banks and their senior executives. “Over the past five or more years, the financial advice profession has been raising the bar on professional standards and accountability. We congratulate the Government for extending these measures to the senior executives who play a pivotal role in shaping the behaviour and culture of our major institutions as we believe they will further strengthen consumer trust in the financial services profession as a whole,” said CEO Philip Kewin. FULL STATEMENT

FPA CEO Dante De Gori queried what the 0.06 per cent levy would be used for.

“There is a question about what the funds raised will be used for and if the tax will be passed onto customers. This will only increase the cost of borrowing and will likely have a knock-on effect for the economy,” said De Gori. FULL STATEMENT

The Australian Bankers’ Association (ABA) lambasted the levy on banks. “If the Government thinks major banks can afford to pay a new tax, it should make every company in Australia which earns more than banks wonder who’s next,” CEO Anna Bligh said. FULL STATEMENT

Similarly, NAB expressed dissatisfaction with the announcement. CEO Andrew Thorburn said: “The major bank tax will impact millions of everyday Australians who are employees, customers or shareholders of banks. It is not just a tax on a bank. It is a tax on every Australian who benefits from, and is part of, our industry.”

Commonwealth Bank CEO Ian Narev said he awaits further detail from Treasury. “As with the many recent new regulatory imposts, we need to take some time to work through the implications. This is particularly so given the lack of detail and the absence of any consultation. However, as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.  We look forward to Treasury outlining how this tax will apply in practice. Once we have received all the details on the new tax, we will do our best to strike the right balance to ensure we continue to enhance the financial wellbeing of people, businesses and communities.”

National boutique private wealth business Sterling Private Wealth (Sterling) has announced the appointment of David Murray as the group’s new CEO.

Announcing the appointment, Sterling principal Peter Stevenson said “David is an exceptional financial service professional with an extensive background, industry insight and track record of success.

“He is an outstanding individual with proven management, leadership and a history of achievement from running his own financial advice practice to his most recent role as Regional Practice Business Manager for BT Magnitude”.

For over 40 years Sterling has provided holistic financial advice through its experienced team of investment professionals and technical strategists with tailored solutions for individuals, HNW families, privately held companies, SMSFs to ensure their financial aspirations are achieved.

Today, Sterling operates from offices in Melbourne, Brisbane and the Gold Coast with 9 advisers, 25 support staff and has over $800m FUA.

Commenting on his appointment, David Murray said, “This is an exciting time for Sterling as we build on a history of success and to position the organisation for the future.

“My goal is to provide the strategic vision that keeps Sterling ahead of the curve with an operational framework that provides professional financial advice services and holistic solutions for our clients.  The first step being the transition to our own AFSL.”

The ‘first-home super saver’ scheme unveiled in the federal budget is not expected to drive a boom in home ownership among young workers; however, it could help get the Millennial generation thinking about their superannuation.

Under the new scheme, a super fund member will be allowed to withdraw a maximum of $30,000 in voluntary contributions, plus deemed earnings, to finance the purchase of their first home. The policy will take effect from July 1, 2018.

Given only 2 to 3 per cent of workers in the Millennial generation currently salary sacrifice, the pool of people tipped to access the scheme is small, Association of Superannuation Funds of Australia chief executive Martin Fahy said.

“However, the publicity around this scheme might generate a greater level of engagement and that can only be a good thing,” Fahy said. “There will clearly be those who benefit from the tax relief on it, but we think it will drive greater and greater engagement with superannuation.”

Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck held a similar point of view. She told Investment Magazine that $30,000 was, unfortunately, not a significant amount in the current housing market, particularly in cities, but predicted the scheme could establish good saving habits among Millennials.

“One potential positive outcome from this is that…it’s a real opportunity in terms of higher engagement levels, and if people get into a habit of putting additional money into super, that is something we would welcome,” Scheerlinck said.

Both Scheerlinck and Fahy were concerned, however, that the scheme could result in increased cost for all members. That’s because the administration of the scheme is complex. The money is invested through a super fund, but the associated records will be held by the Australian Taxation Office.

“ASFA recognises the importance of home ownership as a key pillar for achieving comfort and dignity in retirement; however, the design of any new first-home savings arrangement should never impose on the primary role of super, [which is] to save for retirement,” Fahy said.

Cbus Super chief executive David Atkin was also concerned. He said Cbus would review the details of the scheme to evaluate the impact on workers’ future retirement savings, administrative costs and complexity, and any liquidity implications that could affect longer-term investment strategies.

Others in the industry were more positive.

StatePlus said it believes first-home buyers would be wise to embrace the tax savings offered through the new home savers account.

“This scheme allows young people to save through their super for their first home. It’s an easy tax break and one StatePlus predicts will prove wildly popular,” StatePlus chief client officer Jason Andriessen said.

The Financial Services Council commended the government for designing a new scheme to promote savings for first-home buyers, “without diluting the current superannuation nestegg provided by our universal superannuation system”.

Deloitte head of superannuation Russell Mason also supported the proposed First Home Super Saver Scheme.

Mason explained that if the contributions were made by salary sacrifice, they would be taxed at 15 per cent and the money, plus interest, when withdrawn, would be taxed at the individual’s marginal tax rate, minus 30 per cent.

“We are pleased that the government did not allow the superannuation guarantee contributions to be eroded,” he said. “We are also pleased that the scheme, which will be administered by the ATO, will hopefully mean that an additional administrative burden – and therefore additional cost – will not be placed on superannuation funds.”

A report released in March by the Australian Securities and Investments Commission painted a picture of major financial planning licensees unable to monitor and regulate the actions of their advisers properly, and unable to appropriately address wrongdoing and remediation when bad practices are revealed.

Report 515 Financial advice: Review of how large institutions oversee their advisers, didn’t just portray major institutions in a poor light, it called into question the legitimacy of the financial planning licensing regime, right at a time when new educational, ethical and professional standards are squarely in the spotlight.

The Financial Adviser Standards and Ethics Authority (FASEA), created by legislation passed the month before the ASIC report, will set new standards for all individuals who provide personal financial advice. But if the ASIC report
is representative, then questions must be raised about the long-term role of licensees in granting authority to financial planners to practice.

The divergence of clients’ and licensees’ interests places financial planners in a dual-agency role, which is well recognised as a source of conflicts of interest.

Emerging academic research suggests that: a dual-agency role creates “conflict by association” for financial planners; such a conflict is inconsistent with the objectives of the Corporations Act, therefore delegitimising the current licensing regime; and arguments for individual licensing are now stronger.

As financial planning practitioners continue to drive towards attaining the status of professionals, responsibility for adhering
to professional standards must fall to individual practitioners, free from the influence of an entity whose own aims may be at odds with those standards.

The financial planning industry remains heavily concentrated in relatively few hands, and if those hands fumble the ball, there is a disproportionate effect on the industry.

Data provided to Professional Planner by Adviser Ratings shows that as of April 5, 2017, more than half of all advisers on the ASIC financial advisers register were authorised by just 13 groups, controlling 33 licensee entities. Collectively, these groups had 12,312 representatives out of 24,335 on the ASIC register.

The largest single group, AMP, accounted for 2870 representatives across five licensee entities – more than 11 per cent of all financial planners in the country. The four major banks each had more than 1100 representatives, again split across multiple licensees, and collectively accounted for 5673 representatives – more than 20 per cent of all financial planners. IOOF sat just outside the top five, with 860 authorised representatives across six licensees.

For a full analysis of authorised representatives by licensee and ultimate licensee ownership, go here.

ASIC’s report states that the culture of licensee organisations is “very likely to have been a contributing factor” to compliance failures and breaches of the law.

“All of the institutions publicly state that their core values include being customer focused, ‘doing what is right’ for customers, and acting with integrity,” the report states. “Our concern is that, despite these stated values, many of the institutions we reviewed did not ensure that their internal processes consistently supported the value of ‘doing what is right’ for the customer.

Many of the failings we identified led, or had the potential to lead, to poor outcomes for customers.”

ASIC’s findings raise the issue of whether the current approach is a legitimate way to authorise individuals to give financial advice. There is a theoretical framework for testing the legitimacy of organisations, and whether their structures and activities are “desirable, proper, [and] appropriate within some socially constructed system of norms, values, beliefs and definitions”.

The framework was developed by US sociologist Mark Suchman and first applied to financial planning by Angelique McInnes and Abdullahi D. Ahmed, then both of RMIT University, in a paper published in the Financial Planning Research Journal.
The conclusions of their pilot report aren’t encouraging. They found that the licensing of financial planners lacks legitimacy in several critical respects. However, they said further research was needed. McInnes, now a lecturer at Central Queensland University, is conducting that research as part of her PhD work. She says there are, broadly, three types of legitimacy: regulative, cultural-cognitive and normative (or moral).

In financial planning, regulative legitimacy is proven if the affiliation of planners with product providers does not lead to unintentional compliance breaches.

Cultural-cognitive legitimacy is proven if the Australian public can clearly distinguish between advisers defined as “independent” by the Corporations Act, and those who are not independent. Finally, normative or moral legitimacy is
proven if:

• Alignment to product issuers does not lead to commercial interests compromising advisers’ best interests duty.
• Affiliation to product issuers does not lead to sales procedures, standards and practices designed to reinforce product distribution while giving the appearance (window dressing) of satisfying regulatory requirements.
• Alignment to product issuers does not lead to conflicts of interest from association.
• Contributions by individual leaders of aligned licensees to the debate surrounding the licensing of advisers are not aimed at protecting their product distribution channels.

If those tests cannot be met, then the licensee structure arguably lacks legitimacy.

Within the context of financial planning, McInnes says, there has so far been little formalised study of licensee legitimacy, but her pilot study and the preliminary findings of her more detailed work suggest it is lacking.

Tom Reddacliff, a former managing director of NAB-owned licensee Godfrey Pembroke, says the current licensing structure means the public can never trust that the industry serves their interests rather than its own.

This masks the fact that “most financial planners I know have a passion and desire to make a difference to their clients’ lives, a truly noble cause of any profession”, Reddacliff says. “There are countless examples and case studies, which don’t get anything like the respect and recognition they deserve.”

The new standards will “clearly make a substantial impact on the journey to becoming a profession,” he says.
A paper Reddacliff has written suggests a new structure for financial planning regulation, in which the licensee – or a renamed version of that entity – continues to provide services to financial planners and their businesses, but the licensing aspect of
the relationship is removed.

Reddacliff argues this would put financial planning on a footing similar to other professions, where a licence to operate is granted by a body independent of the businesses in the profession.

“But financial planning has a structure like no other profession,” he says. “If you examine medicine, law, accounting, engineering and actuaries, you will observe none of them have a licensee structure or equivalent. Instead, the professional is either registered under the law, by entry standards, or by both. Other stakeholders in this approach are the professional associations and standards boards.”

McInnes supports this assertion.

“Doctors may prescribe certain pharmaceutical products they favour, but unlike financial advisers, they are not licensed to practise their craft through these pharmaceutical institutions,” she explains, in a discussion paper titled “Legitimacy of the current ‘authorised representative’ licensing model”.

“Indeed, lawyers, doctors and accountants work for corporate institutions, yet when they leave these institutions they retain their professional status – their ‘license’ to practise – and are able to work without being employed by other corporate institutions. This is not the case [with financial planners]. Instead, financial advisers are expected to recommend the financial products on their licensee’s approved product list.

“They are also licensed to practise through these licensees. Unlike other professionals, advisers lose their status and right to earn a living as a financial adviser when they leave their institutional licensee.”

FASEA emerges

A fundamental difference exists between financial planning today and during earlier calls for individual adviser licensing. That difference is FASEA. As an independent, standard-setting body, FASEA will play a central role in determining whether financial planners are fit – that is to say, appropriately qualified and trained – to practise. An individual’s right to practise would be contingent on adherence to the authority’s professional, ethical and educational standards, and it is easy to imagine
a scenario in which individuals could also be certified or authorised by FASEA to practise, irrespective and independently of their employer.

Reddacliff states that, under this approach, existing licensees would continue to play a vital role, but reconstituted as “registered advice groups”, or some other term, which “live or die on their value proposition to advisers, providing client-facing tools, support to run better businesses and supporting and fostering a strong professional culture”.

“Good quality groups will survive and thrive in this environment,” he states. “Their cost base and complexity to deliver services should fall and that benefits advisers and, in turn, consumers. Many readers might think this article will draw the ire
of the institutions. That’s not my mail; in fact, the groups with a strong proposition welcome these ideas. If your value proposition hinges on a licence, it’s sitting on a house of cards.”

Reddacliff says individual licensing raises issues that need to be addressed, including professional indemnity insurance and liability, the creation and use of approved product lists and product research, the ongoing role of ASIC in policing advisers’ compliance with the Corporations Act, and the need to ensure that advice businesses are not subsidised by advice support businesses linked to product issuers.

“Financial planning has some significant blockages in need of clearing,” he states. “Without repair, a professional model can’t exist.

Reddacliff adds that, “If the financial planning profession can’t get its act together and become a registered profession under the Professional Standards Councils, the model I’m proposing would be unworkable”.

The chief executive of the PSC, Deen Sanders, says he is hopeful that “the standards and ethical expectations set by FASEA will align to the national Professional Standards Legislation framework, so that at some point in the future the relevant occupations within financial services will be able to become genuine professions, recognised under our legislation”.

Reddacliff says individual licensing could also be an opportunity to introduce efficiencies for the regulator, financial planners themselves and the “registered advice groups” that support them.

“I consistently hear from large licensees they get more than a notice a week from ASIC for information,” Reddacliff says. “Everyone is losing. The regulator is expending considerable resources and time getting the data it needs to discharge its obligations; the licensee often has disparate and legacy operating systems, which means it’s drowning trying to meet the requests; and the adviser is copping it, constantly being asked to provide data in a manual and inefficient way.”

If ASIC requires data from a financial planning practice or practitioner, have them provide it to the regulator directly, Reddacliff says.

“This would introduce more data responsibility for advice businesses,” he argues. “However, you might start looking at the ‘registered advice groups’ for their value proposition in this area. It puts the advice group under value pressure, but advice businesses are in charge of the situation.”

Reddacliff says a move to individual adviser licensing, the formulation of licensees as “registered advice groups” and the use of technology to improve data flow and reporting would move “financial planning towards a true profession, earning the trust and respect it badly needs”.

“It is not good enough just to change the standards. The public needs to see an entire system they can understand and trust,” he says. “Exciting but important times are ahead. Let’s hope all the stakeholders have the courage to go the distance in making this into a true profession, as we all know the difference it can make to people’s lives.”

This is the beginning of a discussion about the future of financial planner licensing. To take part in the debate and have your say, go here.

The data in included in this table is drawn from the Australian Securities and Investments Commission (ASIC) financial adviser register. It is current as of April 5, 2017. The table was collated and the licensees grouped by Adviser Ratings, which has also cleaned up the raw ASIC data to eliminate duplicates and other errors.