FASEA - Destination or Stepping Stone?

Read the latest October 2020 Guidelines for FASEA?

I initially expected these guidelines might provide the “rail lines” for advisory firms to align their growth. Thanks to an extraordinary 2020, advisory firms are seeking as much probability and clarity as possible to grow, re-build, and adjust their business plans.

However, there are no rail lines.

The guidelines are more a discussion of the features about the terrain upon which advice firms will grow.

The guidelines contain a clear consistency— the lack of detail.

STANDARD TWO

Standard Two seeks to ensure advisers act in the best interest of their clients.

Few would argue.

But what is the best interest of each client?

Is it best interest relative to the product being advised upon, the best interest relative to the numerous influences in the client’s broad financial life, or is it best interest as defined by a risk mitigation methodology of the adviser’s licensee?

The model of advice initially extolled by Plato centuries ago where the cure of a part should not be attempted without the treatment of the whole, has served the medical, financial and legal services professions well.

However, today’s Corporations Act defines financial advice as another product, so how can advice as another product serve the whole?

STANDARDS FIVE AND SIX

Standard Five states that all advice should be appropriate to the client’s individual circumstances, while Standard Six outlines that advice must actively consider the client’s broader long term interests and likely circumstances.

What circumstances?

There is no suggestion that circumstances are limited to the client’s superannuation balances, spending habits, risk profiles, financial literacy. Circumstances can extend to include the client’s financial hopes, good and bad financial habits, beliefs about money, and the myriad of influencing circumstances of the significant other financial lives in the lives of each client?

This is before the overlay of circumstances unexpectedly ignited by Covid-19 events, Geo-political instability, interest rate movements and natural catastrophes.

STANDARD SEVEN

Be fair, reasonable and of value is Standard Seven’s creed.

But who is the judge of fair, reasonable and value?

The client? The compliance officer? The media? The judicial system? The responsible manager? The reasonable unemotional person walking the imaginary street?

Wow. Some big questions are ahead particularly for the well-established vested interests as they use their power to protect their existing approaches, assumptions and share prices.

STANDARD TWELVE

Then along comes an extraordinary twist of Standard Twelve seeking every member of Australia’s newest profession to uphold and support the Code while in an extraordinary example of specific detail the guidelines exclude corporate financial services license from having to uphold the Code?

Interesting carve-outs.

The terrain described in the October 2020 FASEA Guidelines is a deliberate stepping stone purposely issued to guide Australia’s newest profession into new territories ahead.

The Guideline’s lack of clarity and specific instruction is intentional. For those criticising the lack of FASEA detail, I’d suggest you might be starting your 2021 advice journey looking through the wrong windscreen.

Bring it on. FASEA is simply a stepping stone to something else.

It’s up to us to create that something else.

What do you reckon?

Cheers,

Jim

PS – Click here to understand more about our new standard - Australia’s first Certification Mark of Professional Financial Advice granted to us by ACCC & IP Australia.

Here are the ways we build growth-minded advice firms:

1. What are your priorities for 2021? - Is extraordinary planning required after an extraordinary 2020? You bet. Clients and teams engaging more virtually, FASEA guidelines being enforced, TECHFIN offerings becoming more prolific putting more pressure on what you consider are your firm's "ongoing" fees. Need help with your plan? Here's access to the best end-of-year Conference for anyone considering building more comprehensive services offerings in 2021 and beyond - The Certainty Adviser Conference - Thursday, November 12th, 11am-2:15pm (Sydney Summer Time) - recordings of each session will be made available to all registrations - here are the details.

2. Join a growing Certainty Advice community of advisory teams from over Australia implementing a consistent methodology to deliver professional advice for post-Covid in the new FASEA era:

Currently, $249+Gst/month on a month by month basis provides access to the growing Certainty community of big firms, tiny firms, regional firms, city firms, firms with investments, risk, or accounting backgrounds all implementing Certainty Advice in their own unique way - weekly webinars, access to the Certainty Advice training curriculum and advice tools. There isn't a community or training facility like it - here are the details.

3. Want quicker results? Join our coaching program:

If you are coachable - i.e. if you are willing to share your implementation work - our team will coach your team to fast-track the development of the advice and pricing propositions for the future post-Covid and post-FASEA. Just reply to this message and put "training" in the subject line...