Bean: Stop advisers going extinct

• Tweet

DIMS providers say it is getting harder to run a profitable business in the current regulatory environment.

Wednesday, November 9th 2016, 6:00AM 2 Comments

by Susan Edmunds

It was revealed last week that the Government had signed off on the FMA’s “enhanced” funding case – giving it almost $10 million more each year, mostly through an increase in levies from financial markets participants.

AFAs’ levy was initially proposed to increase to more than $500 but instead will drop slightly because of concerns about the impact of the change on small players, and the fact that the Financial Advisers Act review is still be worked through and its outcome is unclear.

But personalised DIMS providers say they will be hit hard by the changes.

They have been dialed down from what was initially proposed, so that those with smaller levels of FUM do not face such a large hike.

But the increases are still significant.

A personalised DIMS provider with between $50m and $100m under management will be hit with a levy increase from $304 a year at present to $2400.

If they have between $100m and $500m under management, the annual fee increases to $4800.

One personalised DIMS provider, Alistair Bean, said his business would remain profitable under the new structure “but it’s another imposition”.

“It's becoming a never ending déjà vu,” he said.  “We find ourselves in a position again where decisions have to be made about running one’s business when the regulatory body once again doesn't currently quite know what the outcome or ‘rules’ are going to be.

“This is another cost - or effectively tax -  that has to be born.  The hours and years that have already been spent to date by not only small but also large providers in time and research to meet requirements cumulatively adds up to hundreds of thousands of dollars and for corporations likely millions for something that was only just becoming bedded in and is already changing almost before it began.”

He said he offered a personalised DIMS service so clients did not have to make all the decisions.

“Now it appears that I will be faced with an increased levy to place the clients’ interests first. As an aside, this week I am paying my annual PI cover premium and also my two-early external AML/CFT audit cost, not to mention keeping ahead of my CPD requirements and I have also this year taken on a part-time staff member for the sole purpose of keeping up with compliance.

“Perhaps the Government could consider subsidising the very endangered species of financial advisers …for what is an ever growing demanded service by the public to ensure we don't become extinct. Why do most of us do what we do? Mainly because simply we like to help people, but gee it's becoming harder.”

IFA chief executive Fred Dodds said it was disappointing that the Government had not chipped in more money for the FMA.

The annual FPSR fee will increase from $304 to $460 for those not in any other levy classes and from $304 to $460 at registration.

Tags: DIMS FMA

Comments from our readers

Sign In to add your comment