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Future of Financial Advice

What is FoFA?

In 2012, the Federal Government passed a piece of legislation known as the Future of Financial Advice (FoFA). FoFA was designed to improve the quality and transparency of financial advice.

Four of the main features of FoFA where you will see changes are:

FoFA is designed to ensure that your Adviser is acting in your best interests and needs.

Morgans is a full service broking and advisory firm. Our business model is designed to ensure that Advisers form a close relationship with you and provide you with the best possible advice.

The FoFA legislation has now introduced a regulatory obligation on all industry participants to provide clear and transparent information to you regarding the services provided and how they are charged.

The majority of the FoFA reforms come into effect from 1 July 2013.

Annual Fee Disclosure Statement

If you are a retail client with an ongoing fee arrangement receiving personal advice, you will receive an Annual Fee Disclosure Statement from your adviser, commencing July 2013.

This statement will include:

  • a list of the services which you are entitled to receive
  • a list of the services which you have received in the previous twelve months
  • a schedule of the fees which were charged for these services

If you are a Sophisticated Investor, or a client receiving general advice or no advice, you will not receive a statement.

If you have multiple accounts which receive different levels of advice, only those which fall into the category of personal advice will be included.

Conflicted Remuneration

Conflicted remuneration refers to any remuneration which may influence an adviser to recommend a certain financial product or financial strategy.

Financial products include platforms such as:

  • investor directed portfolio services (IDPSs) and IDPS-like schemes, which are treated as financial products because they are managed investment schemes
  • superannuation master trusts
  • other superannuation funds and managed discretionary account services

FoFA bans any payments to advisers from product or platform providers which may influence their choice of strategy for your accounts.

Morgans is not owned by any organisation and as such our advisers are not influenced to recommend particular products to clients.

Best Interest Fiduciary Duty

Best Interest Fiduciary Duty means your Adviser has a legal obligation to:

  • act in your best interest
  • provide appropriate advice
  • warn you if they are giving incomplete advice
  • prioritise your interests

Morgans has always sought to act in the best interests of our clients. FoFA now makes this the law.

Opt In Renewal Notice under an ongoing fee arrangement

From 1 July 2013, advisers are required to seek consent from new clients to continue an ongoing fee arrangement if:

(a) a financial services licensee gives personal advice to a person as a retail client; and 

(b) that person enters into an arrangement with the financial services licensee, or a representative of the financial services licensee; and

(c) under the terms of the arrangement, a fee (however described or structured) is to be paid during a period of more than 12 months

Consent is required to be obtained every two years to enable the ongoing fee arrangement to continue.

More information

If you have any further questions, please contact your Morgans Adviser or nearest Morgans office.