(03) 9020 2905PANIC! Act swiftly! Oops, hold on. My bad. That was for something else that started on July 1 – my new fitness regime. Epic fail already.
Don’t panic in regards to the Future of Financial Advice (FoFA) reforms. The benefits are coming and in some cases have already arrived.
Some will benefit without doing anything, while others might need to update their investments and super.
FoFA aims to lift the quality of advice, increase fee transparency, reduce product costs, ban conflicted remuneration and remove The Pogues, sorry, rogues, from the industry.
What should you do?
If you have an adviser, get them to detail your current fee arrangements. The explanation might be satisfactory and changes might not be required. But if not, ask what alternative service offerings they have.
There are still things to consider if you look after your own investments. In particular, platform costs are tumbling. If you use a platform for some/all of your investments, you might need to switch to benefit.
If you’ve never taken an interest in your super? You’ll still benefit. MySuper is being introduced for those who “don’t care”. In most cases, it will dramatically reduce super management costs (for what will be a very basic service). And that will mean more super eventually, hopefully when you do care.
In reality, most financial advisers will have to make minimal changes to client service arrangements because they are ahead of the curve and FoFA-compliant.
But other advisers who have built their business on commissions have reason to feel uncomfortable. They will need to rethink how they provide advice to clients.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.