DelphiNews June 2015

I’m pleased to enclose the latest edition of DelphiNews.

Market Update

The May Purchasing Managers’ Index (PMI) survey data continues to show gradual improvement in the growth rate of global manufacturing.

The US Federal Reserve remains data dependant on the road to interest rate normalisation, whilst in the Eurozone economic recovery continues on the back of the European Central Bank’s quantitative easing.

China’s central bank continues to provide stimulus to the slowing economy – cutting interest rates for the third time in 6 months.

At home, the RBA keeps interest rates on hold at 2% at the June meeting, whilst the Federal Budget forecasts deficits until 2020.

Economic Update

In the latest Update, John Owen, Portfolio Specialist at MLC, reviews events in Australian and Overseas markets during May. John notes that the World share market performances were mixed in May. Japan was the best of the major global markets, rising by 5.1% in local currency terms - while the US market delivered a relatively modest gain of 1.3%.

Elsewhere, Germany, Hong Kong and Singapore delivered negative returns. Emerging markets also lost ground with Brazil, Russia and South Africa recording the largest falls.

Future of Financial Advice History

Back in 2012, the Federal Labor Government introduced reforms to the financial services industry called the ‘Future of Financial Advice’ (FoFA). These reforms aimed to increase confidence and trust in the financial planning industry by enhancing the quality of advice delivered to clients, strengthening investor protection and increasing fee transparency. The majority of these reforms became effective on 1 July 2013.

Then on 20 December 2013, the new Federal Coalition Government announced a package of changes to FOFA to implement its election commitment to reduce compliance costs and regulatory burden on the financial services sector. The changes were aimed at ensuring the integrity of the financial advice framework is maintained whilst delivering a system that offers affordable and accessible financial advice to the Australian community. On 20 June 2014, the Government announced the final package of changes to FOFA.

The Government's amendments were implemented through the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014. The Regulation commenced on 1 July 2014.

The Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, including parliamentary amendments made by the Government, was passed by the House of Representatives on 28 August 2014. The Bill is currently before the Senate. Interim regulations (that is, those replicated in the Bill) will be repealed once the Bill passes the Parliament.

The Government agreed to make further improvements to FOFA on 15 July 2014. These improvements were implemented in the Corporations Amendment (Statements of Advice) Regulation 2014, which was made on 4 September 2014 and will commence on 1 January 2015.

In short there has been a significant amount of regulation introduced and amended in an effort to ensure anyone providing financial advice always puts their clients’ interests first and are transparent about the fees and services associated with their advice.

As part of this process, we’ll now be providing affected clients with a document called a ‘Fee Disclosure Statement’ on an annual basis. This annual statement will list the services you received, the services you were entitled to as well as the associated ongoing fees you paid. Additionally we will be required to confirm with some clients whether you would still like us to remain as your Financial Adviser.

Please contact us if you have any questions regarding the Future of Financial Advice requirements or this month's articles.

Regards

Vince Dore CFP
Director

Vince Dore and Delphi Financial Management Pty. Ltd are Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749, trading as Garvan Financial Planning/MLC Financial Planning an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax and/or legal advice prior to acting on this information. The material contained in this newsletter is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this email.

Level 7, 60 Carrington Street, Sydney, NSW 2000
1300 167 826

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