MOST PARAPLANNERS WILL NOT BECOME ADVISERS

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News

www.fsadvice.com.au

Volume 17 Issue 01 I 2022

Inheritances hit $1.5tn

Australians give away the vast majority of their wealth, as some $1.5 trillion has been passed on to the next generation since 2002, the Productivity Commission finds.

In 2018 alone, nearly 90% of the $100 billion transferred was in the form of inheritances passed on following death. Children of the deceased were the major recipients, while the remainder went to a surviving spouse or to other family and friends, the Productivity Commission’s newly released Wealth transfers and their economic effects report suggests. Only 2% of this wealth went to charity.

The average age of the recipient was 50 years old, inheriting about $125,000 (the median being lower at $45,000).

“In contrast, the average recipient of a gift was about 20 years of age, at the beginning of their career, yet to start a family or purchase a house, and received about $8000 (again, the median was much lower, at about $1000),” the report read.

The study also found Australians invested a substantial share of their inheritances - but did not do so wisely to overcome inflation.

In real inflation-adjusted terms, each $1 of inheritance increased household wealth by $10 three years later, but only $0.90 some four to seven years later.

The Productivity Commission predicts between 2020 and 2050, an even bigger inheritance will pass onto the next generation. fs The numbers

69%

The proportion of paraplanners who are female.

Most paraplanners will not become advisers

Karren Vergara

Despite popular belief, an overwhelming number of paraplanners do not intend to pursue a career as a financial adviser, a new report reveals.

Fintech Tanngo, together with The Paraplanner Hub, found that almost three quarters of paraplanners (72%) see their role as a career in the industry and not as a stepping-stone to becoming an adviser and many say that they are content in their roles.

In their inaugural Paraplanner Hub Survey, they suggest more needs to be done about supporting career progression of paraplanners by providing technical support, development, and education.

Paraplanners that have the biggest desire to move to adviser roles are employed paraplanners, and the contracted and part-time paraplanners have mostly chosen a career-path in paraplanning, the report reads.

“This suggests that employed paraplanners could be perfect candidates for the Professional Year Programme to cultivate new advisers for our industry.”

The majority (69%) of Australia’s paraplanning sector is female, aged between 30 to 40 years old. About 60% are employed either full time and part time, while 39% are contractors. On average, they have over four years’ experience in the industry.

Only 21% of paraplanners are found on the ASIC Financial Adviser Register. Only a third (34%) are members of an industry body.

Paraplanners believe they are not “glorified typists” and have influence over the strategy and product advice provided to a client, meaning that they are critical in developing appropriate and compliant advice.

“If this is the case, then they should have recognisable qualifications so that all who produce advice are suitably qualified, and their qualifications are transparent and easily identifiable for those who employ their services,” the report said.

It takes paraplanners four to six hours to complete a standard SoA that is priced between $451 and $550. fs

E&P pulls the plug on DASS

The troubled superannuation subsidiary of E&P Financial Group is now in voluntary administration.

PwC acts as voluntary administrator of Dixon Advisory and Superannuation Services, parent company E&P Financial Group said, adding that “mounting actual and potential liabilities mean it is likely to become insolvent at some future time”.

Such liabilities include potential damages that will arise from the Piper Alderman and Shine Lawyers class actions, numerous claims made to AFCA, as well as civil penalties agreed between DASS and ASIC.

Piper Alderman commenced the class action in the Federal Court last November, defending investors who received dodgy advice in the group’s beleaguered ASX-listed US Masters Residential Property Fund.

Kosen-rufu, which is part of the class action, attempted to freeze the payable $7.2 million civil penalty ASIC slapped on DASS that same month.

Despite the trouble it has caused investors, ASIC dropped its case against DASS in July 2021, seeing that a $7.2 million penalty and $1 million to cover legal costs was fit.

E&P managing director and chief executive Peter Anderson said the move to call in administrators was “necessary”.

“It has also become apparent that settling individual claims as they arise will likely lead to inequities between client creditors. Voluntary administration provides an appropriate framework to ensure all client creditors are treated equitably. Importantly, no client assets are at risk as a result of this process, and we will strive to minimise any disruption to clients who will have ongoing access to their adviser(s),” he said. fs