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Product and advice must be separated to make industry a ‘genuine profession’

By Reporter
01 April 2022 — 1 minute read

The Advisers Association (TAA) CEO has outlined a blueprint to separate “financial advice” and "financial product advice”.

Just weeks after publicly supporting a recommendation by the Australian Law Reform Commission (ALRC) for the definitions to be simplified, Neil Macdonald has again called for its separation in a new opinion piece published on sister title ifa.

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“Separating product from advice will not mean an adviser can’t, or shouldn’t, recommend a product solution. Of course, they will, and in many cases, certainly, they should,” Mr Macdonald wrote.

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“How would it be if we went to the doctor, explained we had a headache, the doctor diagnosed us as having a migraine but then did not prescribe a solution, often a pharmaceutical product, to help manage it? 

“What separating product from advice should mean that product providers can’t go about pretending to provide advice when what they are actually doing is providing information on their own product. In other words, they should not be allowed to tell people that the information they provide about their migraine product is medical advice.”

Mr Macdonald has called for changes to the definitions in the Corporations Act, as well as divorcing the word ‘advice’ from ‘general advice’ and changing who and what structures are required to offer personal advice.

“Transforming the financial advice industry to a genuine profession requires the uncoupling of advice and product and a collective will - the willingness for all stakeholders to work together collaboratively,” Mr Macdonald wrote.

Read the full opinion piece here.

Product and advice must be separated to make industry a ‘genuine profession’
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