The Future of Financial Advice reforms will lift private savings under advice by $144 billion over the next 15 years, cut the price of financial advice in half and double the amount of advice being provided.
Research undertaken by consulting firm Rice Warner on behalf of Industry Super Network (ISN) was upbeat on what it called the transformational impact of the post-July 1 financial advice framework.
“The report finds that within a decade and a half there will be a doubling of financial advice, primarily due to the expected increase in demand for individual pieces of advice,” said ISN chief executive David Whiteley, pictured below.
“The reforms to financial advice will set the industry up for a long period of stability and the research confirms that consumers can have renewed confidence in the system.
“Most significantly, it demonstrates the profound impact on national savings, with $144 billion extra in private savings under advice within a decade and a half.”
The report also includes a cost-benefit analysis of the reforms and finds that the benefits to consumers outweigh implementation costs up to three times over.
The cost benefit analysis finds that over 15 years, the benefits of reform outweigh the costs even on the most conservative assumptions.
“These findings show that the laws are a win-win for both planners and consumers,” Whiteley said.
He added that the financial advice reforms will transform how Australians receive financial advice in two ways.
Firstly, financial advice will be in consumers’ best interests and the price of this advice is transparent and secondly, access to straightforward advice about their super is readily available at an affordable price.
| Key findings from the Rice Warner report include |
| The Future of Financial Advice (FoFA) reforms will boost Australians’ private savings under advice by $144 billion by 2027. |
| The average cost of advice will reduce from $2,046 before the reforms to $1,163 after the reforms by 2026/27 (in 2012 dollars). |
| A doubling in the provision of financial advice to Australians – by 2026 there will be 1.88 million pieces of advice provided compared to 893,000 pieces under a no-reform scenario. |
| The number of financial planners employed will remain stable over the long term, with growth dependent on how quickly the sector adapts to shift in demand for scaled financial advice. |
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