Financial Advice - Industry Musings
Merger vote set to proceed
The Financial Planning Association and Association of Financial Advisers last week confirmed that the merger talks were making progress. The group confirmed a vote of both membership bases will be called in February 2023 with key documents currently in the process of being drafted. This follows Australia-wide consultations and news of the challenging financial results for both groups as advisers leave the industry. The vote will require a 75 per cent majority to be approved. Tahn Sharpe covered it here.
QAR proposals ‘sensible’
The Financial Services Council has openly recommended the implementation of Michelle Levy’s Quality of Advice Review proposals. Labelling the report a “sensible roadmap” a few improvements were offered but by and large the group agreed with the ‘good advice’ principle, the abolition of Statements of Advice and the redefinition of person advice. Further, they recommended it be implemented as quickly as possible while minimising any further disruption on the industry.
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Super back in crosshairs
The Federal government has once again brought superannuation tax benefits into their crosshairs. Financial Services Minister Stephen Jones raised the prospect of retrospectively capping large superannuation balances, with some groups suggesting no more than $5 million should be held in the structure. Superannuation tax benefits appear easy pickings for politicians given their focus on a single, older cohort, though this would also significantly impact on the tax effectiveness for younger generations. The SMSF Association immediately indicated they were strongly against any such cap.
Banks and insurance companies to re-enter the advice?
Sticking with regulatory change, Michelle Levy has defended the proposal for banks and insurance companies to re-enter the advice sector. Reiterating the challenge of a dwindling pool of 16,000 advisers trying to deliver advice to an entire population, which is impossible, the need for a ‘diversity of providers’ remains key according to Levy. The definition of ‘good advice’ will be central to how these entities step back into the breach, however, the ability to deliver cost-efficient and beneficial advice will require significant scale.
Perpetual and Pendal merger
Finally, it was a busy week for the funds management industry with the battle for Perpetual and Pendal taking another interesting turn. With Perpetual and Pendal in discussions around a potential merger to create another management powerhouse, Regal Funds and PE firm BPEA lobbed not on but two competing bids to takeover the company. They clearly see value in splitting the custody and asset management businesses, but both have thus far been rebuffed.