– The Future of Financial Advice (FoFA)
The importance of financial advice became clear when the government addressed unacceptable practices in financial planning. The fiduciary duty of financial advisers is now a critical regulatory requirement. We believe financial planners should always prioritize their clients’ best interests. Our practice has followed this principle since its inception.
The FoFA regulations for the financial services industry came into law on 1 July 2012. The first major impact/s of that change took effect as from 1 July 2013.
Continuum Financial Planners responded to these regulatory changes, addressing requirements for:
- Fee Disclosure Statements (FDS)
- Best interests duty
- Conflicted remuneration
Fee Disclosure Statement (FDS)
Clients with ongoing service packages must receive a compliant Fee Disclosure Statement (FDS). This requirement began on July 1, 2013. The FDS must detail:
- The actual fees paid by clients in the past twelve months.
- The services agreed upon with the financial planner.
- Confirmation of whether those services were delivered.
The FDS helps clients understand what they are paying for. While it incurs additional costs for advisers, Continuum Financial Planners absorbed these costs, maintaining service value.
Best-Interests: Advice appropriateness
Regulations require financial planners to demonstrate that their advice is appropriate and has a reasonable basis. The new regime mandates that Statements of Advice (SoA) include:
- Adequate financial data.
- Clear rationale for the recommended strategy.
The SoA must also show how the advice aligns with the client’s best interests. Our advice team diligently ensures compliance with these requirements. Our commitment to fiduciary responsibility and client best interests has always been a core philosophy.
Conflicted Remuneration
Conflicted remuneration refers to income that could create a conflict of interest, putting the recipient’s interest above the client’s. This includes commissions, volume bonuses, and ‘shelf space’ fees. Although these forms of remuneration are being phased out, they have historically imposed costs on consumers.
Commissions, especially in banking, lending, and life insurance, are challenging to eliminate. However, changes are underway to eliminate percentage-based payments.
Continuum Financial Planners has always operated on a fee-for-service basis. We only accept asset-based fees when clients prefer them over flat-dollar fees. Any such remuneration is considered when determining fees payable by clients.
Financial Advice Matters – To Us and Our Clients
To benefit from working with trusted financial advisers at Continuum Financial Planners:
- Call us at 07-3421 3456
- Use our “Book A Meeting” facility to schedule an appointment
Let’s structure your financial advice to serve your best interests.
(This article was first posted in June 2013. It has occasionally been refreshed/ updated, most recently in September 2024.)
