Compliance update: December 2023

As we reflect on the challenges and triumphs of the past year, it’s imperative to ensure that we stay abreast of crucial updates and reminders to uphold our commitment to compliance.  This update aims to shed light on key industry changes and guide you through the evolving landscape. Should you have any queries or require clarification on any compliance-related matters, please don’t hesitate to reach out to Geoff Byrnes.

Industry dynamics: A year in review

The financial planning industry has undergone significant transformations in 2023, prompting us to stay vigilant and adapt to new compliance requirements. Here are some of the key changes over the past year:

  • Merger between FPA and AFA – FAAA
  • Loss of financial planners due to exams and other requirements
  • Concessional tax rate changed to 30% on super superannuation balances over $3 million
  • ‘Good Advice’ versus ‘Best Interest’ implications unveiled
  • Normalisation of pension payment threshold
  • Experienced Pathways Legislation passes
  • QAR discussion points introduced to parliament but awaiting discussion
  • Ongoing delays on the QAR Legislation

While the regulatory landscape may seem complex, it is crucial to stay informed and prepared for potential changes, some of which may materialise in 2024.

Industry outlook: navigating challenges and embracing opportunities

Looking ahead, the financial planning industry anticipates improvements that will enhance the affordability of advice and empower clients to make well-informed decisions. Despite current challenges, we are confident that we are on the right trajectory to ensure client satisfaction.

Predicting the future: challenges and opportunities

The current count of professional year students suggests that the number of financial planners may remain low in the coming years.  While this is disappointing, it presents opportunities for existing financial planning groups to showcase their expertise and dedication to clients.

Navigating goals-based discussions in compliance with the Corporations Act

Effective client engagement in financial planning requires a nuanced approach, considering diverse reasons clients seek advice—retirement planning, loan management, insurance, cash flow, or investments.

Crucially, compliance with the Corporations Act guides this process. Prioritise clients’ goals, transforming them into Specific, Measurable, Achievable, Relevant, and Time-bound (S.M.A.R.T) objectives.  This not only aligns with regulations but showcases a commitment to understanding the client’s financial landscape.

Thorough note-taking and outlining remain pivotal. Rather than superficial discussions, financial planners should proactively ‘dig deeper,’ posing additional questions to understand clients’ motivations comprehensively.

For instance, if a client mentions retiring comfortably, delve into specifics—defining comfort, determining financial milestones, and setting retirement timelines. Explore more unconventional aspects, like downsizing the family home, and address contingencies for added financial security.

This thorough exploration isn’t just regulatory; it’s about truly ‘knowing your client.’ Clients appreciate the depth of inquiry, demonstrating genuine interest and a commitment to tailor advice to their individual goals.

In essence, the depth of your questions mirrors the depth of your understanding. By adopting a meticulous approach, financial planners can foster stronger, more meaningful client relationships, leading to more impactful financial advice.

We are committed to supporting your growth and success as financial advisors. If you have any questions, concerns, or if you’d like to discuss any of the points mentioned in this newsletter, please do not hesitate to reach out to us.

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