Client eNewsletter - November 2014 [a 3-minute read from your trusted financial adviser team]
Just when we thought everything was plodding along rather 'normally' toward the Festive Season for the calendar year-end, we experienced excitement at two levels -
a) some volatility in the sharemarkets (a little later in the year than we had originally anticipated); and
b) the Senate decided you weren't spending enough for your financial planning advice (and that financial planners are all rogues and can't be trusted to act professionally) - and disallowed the government's regulations that had allowed for an orderly transition from 'the old rules(?)' to a revised Future of Financial Advice - 'FoFA'.
The market volatility is not unexpected - and in fact has been within a tighter range than we had allowed for in our outlook for 2014 when we published that late in 2013.
The FoFA reforms are more of an issue for how you, our clients, will be able to interact with us as your advisers: there are a number of changes that will result in higher costs for you to receive advice just because of the compliance procedures we (and all financial planners whether in independent companies like ContinuumFP, or whether they work for a Bank) are now required to adhere to.
Some of the key elements are -
a) fee disclosure statements annually for all clients who have an ongoing service arrangement in place - no change here for clients of ContinuumFP, but many other practices were only providing this statement to clients entering such arrangements after 1 July 2014;
b) prohibition on 'conflicted remuneration' (things like commission on investment products and 'volume bonuses' from platforms) - only minimal change here for clients of ContinuumFP: we have been working on a 'fee for service' model since we began our business and have rebated all bonuses/ commissions (or offset them against calculated fees at the client's request) since then;
c) conflict between being able to provide staged (scaled) advice and advising in a client's 'best interest': the legislation provides for 'scaled' advice but requires it to be provided under 'best interest' rules. Whilst this may seem 'do-able' in the minds of the honourable Senators, the fact is that we can't meet all seven compliance steps to provide best interest advice, whilst restricting the advice to one element of wealth management - e.g., a superannuation account asset allocation whilst ignoring debt management, insurance needs, estate planning impacts etc; and
d) providing a bienniel opt-in requirement: this will increase our administration costs, albeit with no advantage to our clients. Under current arrangements with ContinuumFP, clients who subscribe to ongoing service arrangements are given the opportunity to revise or rescind the arrangement annually: under the laws now passed, such clients will have to be contacted every second year and confirm in writing that they want the service arrangement to continue. (We will write to clients about this process when we have further digested how it will impact on our processes.)
Library Additions -
Over the past few months we have been refreshing and re-posting articles that had been written over the past six or more years - and bringing them to your attention through the eNewsletter. This month we are reverting to the former process of first publishing our new articles through the monthly newsletter.
Linked below you will find three articles about insurance matters that affect most of our clients in one way or another: two of them discuss the Pros and Cons of Life (Death) - and TPD Insurance - inside Superannuation; and the third is comparing Income Protection insurance with Salary Continuance insurance.
We trust you find the information this month interesting and helpful: please feel free to speak to your usual contact person if you would like to discuss any of the topics in further detail.
By the way: our recently offered survey is still open for your feedback to us: we would like to see more clients respond so that we can have comfort that the trends emerging to date really do reflect the views of our seemingly rather satisfied clients. (We will report further on this matter in a few weeks time.)
The ContinuumFP Team
We always welcome feedback: please feel free to do provide any feedback using the Contact Us page on our website; or you can use our social media 'pages' on Twitter, Facebook. Linked In or Google + - or even, simply send us an email.
[This eNews service is specifically provided for our subscriber clients and our network of referrers. Please feel at liberty to Forward to family members or friends. (If uncertain as to how to do that, please call our office and we will talk you through the process.)]
DISCLAIMER:The information contained in this newsletter is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek appropriate financial advice and read relevant Product Disclosure Statements or other offer documents prior to acquiring any financial product.