The advice and investment week in focus - 30th June

By Drew Meredith:

1) The government has published the final report on its long-awaited review into ASIC's Industry Funding Model, which is headed by a key finding that further consultation is required to determine whether the settings for the advice sector remain fit-for-purpose. While the review provided some hope to the advice industry that rapidly escalating levies would be ameliorated, Treasury recommended "...undertaking further consultation to ensure sub‑sector definitions, metrics and formulas used to calculated levies remain fit‑for‑purpose". In a further blow to advisers, the temporary levy relief for personal financial advice licensees that was put in place for 2020‑21 and 2021‑22 in response to rapidly escalating levies will be discontinued. ASIC confirmed the increase a day after the report was released, noting in its annual cost recovery implementation statement (CRIS) that the indicative levy for licensees providing personal advice to retail clients will be $1,500 plus $3,217 per adviser.

2) The Financial Advice Association Australia (FAAA) has raised concerns about the cost to advisers for the government's controversial Financial Services Compensation Scheme of Last Resort (CSLR) bill, which passed through both houses of parliament last week and looks set to take effect without amendment. The CSLR, which provides a compensation mechanism for retail consumers who have lost money due to poor advice, will be funded by the advice industry with the eventual fee per adviser to be determined by running costs. According to the FAAA, there is a danger that these costs could blow out and leave advisers who have done nothing wrong paying an outsized bill for he misdeeds of others. The FAAA has long held that the CSLR scheme has the potential to impose an unfair tariff on advisers, making the point in its submission to the proposal and directly to successive financial services ministers during the life of the bill, which was originally pushed back during the pandemic.

3) Money manager Franklin Templeton has taken the major gong at the 35th annual Fund Manager of the Year Awards ceremony, held at The Star in Sydney Thursday night. Franklin Templeton Australia was named Fund Manager of the Year at the event, beating out fellow finalists BlackRock Investment Management (Australia), Lazard Asset Management, Macquarie Asset Management and VanEck. After 35 years, the Fund Manager of The Year Awards are Australia's longest running independent fund awards. Hosted by economist and former chief economic adviser to then-Prime Minister Julia Gillard, Stephen Koukoulas, this year's event saw three individual and 18 group awards handed out to the industry's peak performers. Franklin Templeton featured heavily in the program, being shortlisted in four fund award categories.

4) While the Australian Stock Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) remain the most trusted financial organisations in the country, banks and financial advisers are clawing back into favour after consumer confidence troughed in the wake of the Hayne royal commission. The ASX released its 2023 Australian Investor study Tuesday morning, which surveyed over 5,000 adults – both investors and non-investors. Among the key findings was a stark movement in the trust Australians place in financial services market pillars, with the public rewarding efforts to reshape the banking and financial advice industry after the royal commission uncovered widespread levels of misconduct, headlined by the infamous fees-for-no-service scandals that engulfed the major institutions. Financial advisers have increased their trust score from 4.98 out of ten in 2020 to 5.3 in 2023, while banks have seen theirs go up from 4.85 to 5.39.

5) Self-managed superannuation fund advisers are in high demand as members navigate the latest round of changes to fund rules, with the new $3M cap on concessionally taxed super set to affect one in three clients according to fresh data from research firm Investment Trends. The proposed cap, which would increase the headline tax rate to 30 per cent from 15 per cent for earnings on any part of an individual’s super balance that exceeds the $3 million threshold, is set to take effect on July 1, 2025. Despite being over two years down the track, the changes have already prompted 24 per cent of SMSF holders to actively initiate discussions with their advisers about it, Investment Trends reports. 

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