Melbourne-based Link Wealth Group has acquired its fourth advice practice, buying a majority stake in Hobart-based full-service financial advisory firm, Sky Advisers.
Often you will speak to a fund manager that will talk about its specialist approach, the market niche that it understands well and can leverage, and how the expertise of its team is a differentiator. It’s rarer, however, to see that manager make an investment that exemplifies all of the talk.
Advice reform and tax ‘razor gang’ lead FSC’s economic growth agenda
The Financial Services Council has proposed a host of changes to financial advice regulatory settings and an overhaul of red tape in the national taxation system as part of a 12-step policy platform designed to stimulate reform and “lift Australia out of its economic malaise”.
Released Wednesday this week, the FSC’s Economic Growth Agenda, addressed to both major political parties in the lead-in to the federal election, includes three policies aimed squarely at deregulating and promoting the financial advice industry.
The council believes the adviser education requirements need to be broadened so potential new entrants aren’t precluded or put off from joining the ranks, in particular accountants and stockbrokers who may be considering a career change.
The group also proposes reviewing the operation of the Compensation Scheme of Last Resort (CSLR), which has been criticised for lumping advisers with a disproportionate Dixons Advisory-fuelled levy and making them pay for theoretical client losses via its contentious ‘but for’ compensation principles.
The FSC’s also wants both parties to commit to implementing the remaining reforms from the Delivering Better Financial Outcomes legislation, which has spent longer than expected in regulatory flux.
Neither of the three proposals are new, but they do bring heightened attention to some of the most pressing policy issues festering on the government’s watch. Fixing the education system, which raised standards but shut out many prospective entrants from the industry, as well as addressing the poorly designed CSLR program, have the potential to improve the health of the advice industry dramatically.
“The current education requirements for financial advisers are unduly prohibitive to new entrants, exacerbating the shortage of financial advisers,” the proposal states. “The pathway to becoming a financial adviser should not be limited to people who have completed a financial planning degree and instead should be flexible enough to accommodate new entrants and career changers by having elements of their pre-existing degree courses recognised, while maintaining appropriate qualification levels to ensure consumer protection.”
Broadening the number of pathways to advice, which should include a track for the new class of adviser being created as part of the DBFO reform suite, will help alleviate the 58 per cent increase in the cost of advice between 2018 and 2023, the FSC says.
On the CSLR, the council bemoaned the fact that its flawed design has resulted in advisers paying too much of the bill for the Dixons Advisory collapse. The CSLR is also predicated on the same ‘user pays’ industry funding model that forced advisers to may an outsized portion of the ASIC levy, the FSC notes.
“The cost burden on financial advisers has increased signficantly due to the combined impact of the annual ASIC levy and the CSLR levy,” the proposal states. “The ASIC levy has more than doubled in recent years, and is projected to cost $1,500 per licensee, plus $2,878 per adviser for FY24. Further, the inclusion of Dixon Advisory cases in the CSLR has meant that financial advisers are expecting an aditionla levy of at least $1,186.”
The council wants policymakers to review solvency arrangements and the CSLR’s administration costs, as well as consider government contributions and the capping of industry contributions.
Outside the advice sphere, the FSC has an “holistic tax reform agenda” that includes lowering corporate tax and realigning state and consumption taxes, while also ensuring the “stability and fairness” of superannuation tax settings.
“The last comprehensive review of Australia’s taxation system was held in 2015, and the financial services industry supports tax policy settings being re-evaluated to identify areas for reform to promote Australia’s long-term prosperity,” the proposal states.
“Important considerations in such a review include the appropriateness of the overall tax burden and levels of government spending, as well as examining the relative efficiency and distribution of taxes,” it continues. “Australia’s reliance on direct taxes, including a company tax rate that is internationally uncompetitive and increasingly onerous personal income taxes, should be examined, along with opportunities to remove inefficient state taxes.”
