Conflicts and New Products
By Greg Roberts
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Greg Robert is a Principal of Global Aged Care Services. He is also an EstCare Principal and trains and mentors Aged Care Specialist Advisers™. Greg has many years of specialist experience assisting aged care facility operators and prospective residents – especially those with special needs. |
On Wednesday June 8th, 2011, ASIC imposed “additional conditions” on the financial services license (AFSL) of iPlan Financial Services (iPlan) after investigating its advice business. The ASIC findings concluded that iPlan had entered into an agreement regarding an investment platform which created a conflict of interest[1] as they may have advised client to transfer from existing products to the platform without proving basis for the advice, disclosure provided to clients was insufficient and some clients faced losses as a result.
ASIC has insisted that the iPlan AFSL includes conditions that require communication to clients about how the firm manages conflicts of interest. An independent compliance expert must also review the advice process and calculate payments to be made to clients.
ASIC has, by its findings, sent a clear message to all players in the financial services sector. In the words of ASIC Senior Executive Leader, Financial Literacy, Consumers, Advisers and Retail Investors, Delia Rickard, ‘Licensees often have a conflict of interest when recommending products to clients. We say it is up to them to manage these conflicts and, if a conflict exists, they need to make sure they demonstrate a reasonable basis for any product recommendations.’
The findings reaffirm what we at EstCare have always believed. The EstCare Model splits the advisory function from the investment function. EstCare products, the Aged Care Investment Service (ACIS) and the Personal Injury, Disability and Residential Care Investment Service (PIDARCIS) are deliberately placed as separate to the EstCare training, initial and ongoing service offerings, and can be properly and professionally utilised as part of the service.
Additionally, the rollover of the ACIS FSG has seen genuine fee reductions for investors as well as a suite of new cash and fixed interest funds. The blend of these funds, with a ratings range from A to AA, over PIMCO, Macquarie, Vanguard and Schroders, has returned a net 9.1% over the last 12 months (as at 30 April 2011).
The ratings of the major banks have been downgraded (on May 18th 2011) to A, so ACIS represents a very viable option for all investors in these services. Plus, those with a longer term investment horizon can still access a broad range of wholesale growth investment options through it as well.
Visit us at EstCare www.estcare.com.au and investigate the Aged Care Investment Service and the Personal Injury Disability and Residential Care Investment Service.
