Financial services professionals offering aged care advice must be authorised representatives

There is an ethical conflict with wholesale advisors providing advice to consumers seeking aged care advice.

There appears to be a trend occurring among financial services professionals where those who have chosen not to sit, or have not passed, the financial adviser’s exam, are opting to offer advice via a wholesale licence, relying on the loophole that their aged care clients would meet one of the wholesale client tests.

We raise our concerns about financial professionals offering aged care financial advice on this basis as we do not accept that ANY aged care client could ethically be considered a wholesale client. All clients entering the aged care system are vulnerable persons. Based on this, they should only be considered retail clients, so that they are afforded the most consumer protections that the financial services laws can provide.

Financial services laws are designed to protect consumers, with a variety of compliance obligations in place. A financial professional who holds a retail licence is allowed to call themselves a Financial Adviser, or a Financial Planner and must comply with professional standards. These advisers are referred to as Authorised Representatives. Those who only hold a wholesale licence cannot use any of these terms to describe their business activity, and titles vary widely depending on the business one operates (e.g. Investment Specialist, Principal Director, Wholesale Advisor). A business should be very clear about the type of licence they are operating under so prospective clients can make an informed decision whether or not to engage their services.
An authorised representative is required to provide compliance documents such as a financial services guide to their clients, and if they provide personal advice, must put this in writing in the form of a Statement of Advice. A wholesale advisor does not have such an obligation.

At the AASP, financial professionals who provide financial advice to aged care clients are expected to hold a retail licence. Providing financial consultancy services requires a member to clearly articulate what their service offering is and also what it is not (e.g. Centrelink support, and NOT financial advice).

As with many laws, there are grey areas which are open to interpretation. There is much debate about how aged care advice does not specifically require ‘product advice’, and therefore the financial services laws pertaining to such do not necessarily apply. Many will argue that as long as there are no specific product recommendations, there is technically no rule breached. This appears to be the main loophole some are using to provide aged care advice under a wholesale licence. Technically, the law says a business ‘can’ offer services this way, but does it really mean they should?

To ensure high standards are upheld, the AASP take the view that providing aged care advice under a wholesale licence only is not sufficient. The AASP encourages all aged care providers to be diligent in ensuring their financial advice referral partners all hold a retail licence – i.e. that their authorised representative status is “current”. This can be checked via the Moneysmart website

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