The advice and investment week in focus - 13th September

1) The corporate regulator has third-party product distributors in its crosshairs after a new report highlighted the "limited" ability of providers to assess and monitor how good hired distributors are at selling products in accordance with the design and distribution obligations. ASIC's concern is that adding an extra distribution layer adds a layer of risk from a compliance perspective – especially in the context of the D&D laws, which were introduced in October 2021 to ensure issuers were taking a "consumer centric approach" and selling appropriate products to their target market. "We observed that some issuers who were using third-party distributors did not require third parties to take the same approach to distribution as they were taking to directly distribute their products to consumers," ASIC said this week, after releasing a report into ongoing compliance with the D&D obligations [Report 795].

?2) The Australian Human Rights Commission (AHRC) is urging the federal, state and territory governments to urgently implement reforms to achieve national consistency in laws governing financial enduring power of attorneys (FEPOAs) across all jurisdictions. This key recommendation stems from the AHRC’s detailed report, titled?Empowering Futures: A national survey on the understanding and use of financial enduring powers of attorney. Released on Tuesday, the report emanated from an online survey of more than 3,000 Australian adults to determine the levels of awareness and use of FEPOAs. The report uncovered critical shortcomings and lack of knowledge about FEPOAs, with some key findings being that only half the people with an FEPOA sought professional advice before creating one, and just a quarter of those acting as appointed decision-makers felt they understood their responsibilities very well when they started in the role.?Further, and most concerningly, two in five had granted an FEPOA to someone who showed characteristics identified as risk factors for perpetrating elder abuse.?

3) The Financial Advice Association of Australia has highlighted several errors in the Australian Bureau of Statistics' proposed update to its classification of occupations, and put forward its own proposal for a new category describing the role of a modern financial adviser. The Australian and New Zealand Standard Classification of Occupations (ANZSCO) is put out by the ABS and is relied upon by a diverse range of stakeholders for the "collection, publication and analysis" of occupation statistics. As part of the ABS' latest review of the ANZSCO, however, several issues were flagged by the FAAA. The most glaring was that in the definition of both categories that relate to the advice role, the skill level listed includes an errant reference to "...at least five years of relevant experience". "This is incorrect as it does not reflect s921B of the Corporations Act," the FAAA points out, while asking for the reference to be removed.

4) While the world is already vastly different to how it was when Trump first took power – and there’s a much greater focus on sustainability – a second go round would “set us back”, according to Anthony Scaramucci, the record-holder for shortest stint as a US presidential press secretary, lasting just ten days in the position in 2017. A confidant of Trump prior to his entry into the White House, Scaramucci knows his way of thinking pretty well – and has a dim view of it. And he thinks that the bigger problem is that Trump has a perspective on NATO, and geopolitics, that “anybody who runs capital wouldn’t want him to have”; one essentially incompatible with the rules-based order that has reigned since 1945. “Yes, we have our adversaries, but there are certain ground rules in terms of the way we operate with each other and this has led to a steady flow of capital going into great innovation and great ideas in the West,” Scaramucci told the ASFA Investment Summit on Thursday. “If you think about the American navy, it’s done more in the last century to protect your economy than just about any other engine in the economy, because of shipping lanes; shipping lanes for energy, shipping lanes for manufacturing, all of this is very hard to go up against the current American navy. The Seventh Fleet is the biggest deterrence against the Chinese when it comes to Taiwan.”

5) Family offices will manage a collective $5.4 trillion and swell in number to nearly 11,000 globally by 2030, according to a Deloitte Private report that also surveyed emerging trends among 354 single family offices overseeing a collective US$708 billion of assets. But with that increased size and complexity comes the need for family offices to adopt different organisational structures and move beyond being embedded in the family itself, with 66 per cent of respondents saying that as family offices grow they will become more professionally managed (66 per cent), and that their portfolios will see greater diversification across asset classes and geographies (55 per cent). “Over time, family offices will become more institutionalised and hire more professionalised staff,” the chief executive officer of one family office told the survey. “Everything we do is run in an institutional way. We come from institutional backgrounds having worked in big banks, and we try to replicate what has worked for others.”

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