The publication for the personal investment professional
www.moneymanagement.com.au
INFOCUS: Page 11 | FOFA – THE MISSING PIECES: Page 18
Planners and investors stay cautious By Mike Taylor AUSTRALIAN investor sentiment has hit one of its lowest points, according to the latest Wealth Insights Investor Sentiment Index. Associated research by Wealth Insights has also revealed that a significant proportion of financial planners are actually urging their clients to more conservative investment settings. The Wealth Insights Investor Sentiment Index, based on a survey process traversing the past 14 months, has revealed the degree to which Australian investors who are financial planner clients have retreated over the period. In particular, the index reveals the manner in which the opti-
Figure 1 Investor Sentiment – December 2011 Proportion of Client Investments in Cash & Fixed Interest
Wealth Insights Investor Sentiment Index 100 80 60
Sentiment Index
Print Post Approved PP255003/00299
Vol.26 No.4 | February 9, 2012 | $6.95 INC GST
40
20
20
-1
0
-24
-20
-32
-40
-74
-60
-81
65%
35%
Other investments
Cash & fixed interest
-76
-80 -100 Oct'10
Dec'10
Feb'11 April'11 July'11 Sept'11 Dec'11
Source: Wealth Insights
mism which was evident in the early months of 2011 evaporated and reached a low point in September, and had barely improved by December.
Wealth Insights managing director Vanessa McMahon said the index seemed to reflect the volume of adverse news emanating out of Europe
Announcement close on accountant regime AFTER months of negotiations, the Federal Government is likely to replace the so-called “accountant’s exemption” with a limited, nonproduct licensing regime. Money Management understands that the Minister for Financial Services and Workplace Relations, Bill Shorten, is close to announcing the new regime which follows the Government’s decision as part of its Future of Financial Advice (FOFA) changes to scrap the regulatory exemption which allowed accountants to provide advice around the establishment of selfmanaged superannuation funds (SMSFs). Under the expected new regime, accountants would be able to apply for a limited licence to provide advice around specific, non-product issues – something the accountants hope will enable them to continue playing a role in the SMSF space. The new regime follows lengthy discussions between the major accounting bodies, the Treasury, and the Australian Securities and Investment Commission, and has come amid growing levels of frustration among accountants at the uncertainty hanging over their existing business models. That frustration continued to grow when the issue of the accountants’ exemption was not covered off when the Government tabled the second tranche of its FOFA legislation in October, last year. Commenting on the process, Institute of Chartered Accountants in Australia superannuation specialist Liz Westover said the amount of time involved had certainly caused frustration among members of the profession.
and the US. “With news headlines that focus on volatile markets, Europe’s debt crisis and a possible second global financial
crisis, it is no wonder that investors currently lack confidence,” she said. Other Wealth Insights research revealed the degree to which advisers themselves had reacted to the volatile market conditions and the manner in which this was reflected in the investment advice provided to clients. McMahon said the data revealed there had been a general retreat on the part of advisers in ter ms of their clients’ exposure to markets. As well, the data revealed that while advisers placed an average of 35 per cent of client investments in cash and fixed interest, those advisers with high-net-worth clients were likely to place significantly more into this asset class.
Expanding intra-fund advice is a ‘slippery slope’ By Tim Stewart
Liz Westover “It has been two years since the Government signaled its intention, so the frustration is understandable,” she said. Money Management understands that the final issues being discussed between the major accounting bodies and the Government involve some of the detailed regulatory arrangements around the limited licensing regime, including the degree to which accountants would need to hold professional indemnity insurance. The accountants are understood to have argued that because the limited licence would preclude discussion of products, the level of need for professional indemnity cover would be commensurately lower. However, there are also broader technical issues to be dealt with, including the regulatory structure around a limited licensing regime. – Mike Taylor
PLANNING groups have expressed serious concerns about the Australian Securities and Investments Commission’s (ASIC’s) proposal to allow transition-to-retirement (TTR) strategies within intra-fund advice. In Consultation Paper 164, the r e g u l a to r p rov i d e d s e p a r a te examples demonstrating how an intra-fund adviser can deliver factual information, general advice and personal advice about TTR over the phone. Financial Planning Association (FPA) general manager for policy and government relations, Dante De Gori, said he had no problem with superannuation funds delivering basic information to their members about what TTR was and how it worked. But he is concerned by the prospect of intra-fund advisers delivering specific advice that recommends a TTR strategy, because intra-fund advice cannot, by definition, take into account all of a client’s circumstances. Association of Financial Advisers chief executive Richard Klipin believes that a TTR strategy
Dante De Gori should only be recommended to a c l i e n t v i a c o mp r e h e n s i ve advice. “Dealing with complex issues around TTR strategies without regard to the full circumstances of the client is a slippery slope that we don’t want the advice profession to get on,” Klipin said. He compared the delivery of intra-fund advice on topics like Continued on page 3 Scaled advice feature on page 12