The architect of the Future of Financial Advice (FOFA) reforms, Bernie Ripoll, fears SMSF clients will continue “losing a lot of money” from one-stop shops if the increasingly popular business model continues to grow.
ASIC’s persistent warning shots over one-stop shops are warranted, according to Mr Ripoll, who believes clients are receiving poor and conflicted advice from operators who house multiple related services under one roof.
“What frightens me in the current financial services world, if we're talking about SMSFs, is this rise of these one-stop shops, where you go see a particular person, who immediately advises you to set up a SMSF specifically for the purpose of buying a property, specifically for the purpose of buying their property in-house, and specifically for them giving all the advice,” Mr Ripoll told SMSF Adviser.
“With lots of those that we see, and I deal in some consumer affairs areas here, is people who were advised into these structures were definitely not suited. They got very, very bad advice and end up paying and losing a lot of money because of it,” Mr Ripoll said.
Mr Ripoll called on SMSF professionals to call out dodgy operators, particularly given their potential to impact unsophisticated investors.
“Everything and anything that we can do, whether it's accountants or financial advisers, they should be calling out those who actually give everyone else a bad name and really hurt ordinary people,” Mr Ripoll said.
“I'm quite passionate about that because I think not only the world has changed, the industry and the sector [have] changed, and the availability for complex products to be sold to people when they really don't need them, I think is a really big risk. We ought to do everything we can to minimise that risk,” Mr Ripoll said.
Mr Ripoll, formerly a Labor minister, retired from federal politics prior to the general election in 2016. Under the Rudd government, he chaired the 2009 Inquiry Into Financial Products and Services in Australia, which made way for the FOFA reforms. He is currently director at Map My Plan, an Australian fintech company which provides advice services to consumers.
By Katarina Taurian
2 August 2018