Networth News

Welcome to the Networth News update for Friday the 30th of September.

To our valued audience – we hear you!

With your inbox growing larger every day, we understand that a lack of time means you don’t always get to open every email. But you did sign up to evoTV’s Networth news to get all the headlines that matter. With this in mind, we are moving to a weekly update, sent to you on a Friday, with all the biggest headlines from the week in finance. We welcome your feedback on this new initiative and thank you for your feedback and support to date.

FoFA a backward step for industry: AFA

The Government's Future of Financial Advice (FoFA) draft legislation as it stands could send Australia's financial planning industry back 20 years, according to the Association of Financial Advisers (AFA). Investor Daily reports that small- to medium-size dealer groups will find it tough to survive under the new regulations. AFA national president Brad Fox said that dealer groups with 50 to 100 advisers will find it hard to cope with extra regulation, supervision and paperwork. Fox said it was likely that such firms would be looking for bigger partners and that it could wind the clock back 20 years to the days of tied agents.

Superannuation reforms to add costs for clients

The Government's proposed Stronger Super reforms would likely add compliance costs for superannuation funds that would have to be passed onto members. The Australian reports that the average cost of compliance and risk management per super fund member a year – currently about $27.50 – would likely go up. It was unfortunate that compliance costs associated with super reforms would likely be passed onto members whose balances were already suffering poor returns, said Wayne Hirt, a partner in superannuation services at KPMG. He questioned who would pay for the costs of meeting new compliance requirements and pointed to a scenario where people on the verge of retiring may have to pay for a benefit they would not enjoy.

Brokers lash out at industry levy

Plans by the Australian Securities and Investments Commission (ASIC) to impose a levy on stockbrokers to fund increased supervision are unfair, according to the Stockbrokers Association of Australia. The Financial Review reports that increased costs of market supervision by ASIC should also be borne by the government. Stockbrokers Association of Australia chief executive David Horsfield said that the proposed cost recovery model as it currently stands will create an unfair and inequitable financial burden for stockbrokers, who could be forced to pass these costs onto clients.

Reducing risks with equity income investing

Despite global market jitters and an unstable local share market, there are a number of worthwhile strategies that investors can pursue, according to MLC. Professional Planner reports that equity income investing could be a more appropriate strategy to pursue in current conditions. Michael Karagianis, an investment strategist at MLC, said this approach, which seeks to maximise income from relatively stable dividend returns may appeal to retirees seeking to live off of the income generated by their retirement savings. Portfolio diversification is essential in current market conditions, according to Karagianis, who said that there are a number of asset classes, including international shares, commercial property, infrastructure, insurance risk and private equity, which could lower investment risks.