In its submission to the 2021-22 Budget, the FPA made a pretty clear argument: increasing the affordability of advice begins with reducing the cost of practicing it.
Part of achieving this, the submission explained, involves a review of the ASIC industry funding levy, which is described as unpredictable and not fully reflective of "the capacity of the financial planning profession to support regulatory costs."
FPA CEO Dante De Gori explained that the levy as it currently stands "makes it practically impossible for a financial planner to effectively budget for this business cost." As evidence, De Gori pointed to the fact that ASIC had predicted a $907-per-planner cost in March 2019, but by the time invoices were issued in January this year, this figure had risen to $1,142.
De Gori continued: "The levy has been increasing at a dramatic rate that far outstrips the rate of revenue growth for most financial planning businesses and is being exacerbated by a reduction in the number of financial planners from whom the levy must be recovered.
"As it has been three years since the levy was first introduced, it would be an appropriate time to review its implementation and impact on the financial services sector."
The FPA's recommendations regarding the industry funding levy form part of its Affordable Advice, Sustainable Profession policy platform, which was launched in June 2020. Since then, ASIC has launched its own affordable advice project, aimed at addressing the "supply and demand issues" created by the mass departures from the industry.
Consultation for this project has closed, but we'd love to hear your thoughts on the most urgently-needed changes in the industry to increase advice affordability. You can participate in our survey here.
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