We need to acknowledge the compliance challenges in advice without being subsumed by them.

Yes, regulatory guides are complex and often difficult to practically apply. Licensee policies, developed to address these,are long and likely not being read, or at best seen as a box ticking exercise. Statements of advice can take a long time to prepare, and are designed to address compliance and legal obligations first with the information required by the client often a secondary consideration. It can take three to six months from seeing a client to closing the product fulfilment, in some cases, over 120 steps and with in excess of 10-15 systems involved. Adviser numbers have plummeted from 29,000 to below 17,000, with an underwhelming number of people joining the industry.

Business valuations have decreased while mental health issues have noticeably increased. Practice economics, on the back of the Life Insurance Framework laws, annual renewal changes, design and distribution obligations, plus breach and incident reforms are far less compelling.

Conrad Travers

We could spend hours on the blame game. Policymakers. The regulator. Hayne. Licensees. Intermediaries. The banks.

It’s all justified, but it doesn’t change a thing. We need to do better.

With a slight respite in regulatory change there is now an opportunity, for the remainder of 2022, to take a breath and think through how we respond in a smarter way with all parties involved. This is where going back to root cause and addressing resourcing, unity and technology are key.

Resourcing

We have a decentralised model with over 2,000 licensees. With the recent shift to self-licensing, a majority have less than five advisers. It means we are all tackling the same issues individually rather than collectively.

We have been encouraging licensees and business partners to share more tools, templates, policies, and processes that are not a differentiator or do not contribute to their value proposition. Advice templates such as SOAs, file notes, fixed term agreements etc do not differentiate an adviser. If we could get to a stage where we have close to universal agreement on what these templates should look like, there can be massive productivity gains in engaging the providers.

We also have the challenge of each licensee being under-resourced individually. Advisers want more value from their licensees and if we can’t figure out a way to scale this more broadly then we will continue to struggle. While there are discussions around individual licensing, this is not the solution for now. It may be plausible down the track, but shifting to that now would inadvertently create bigger issues and probably more remediation as we underestimate the impact of what licensees do behind the scenes. The iceberg metaphor is apt here; we all forget most of the iceberg is under the sea, out of sight.

In addition, the view that licensees have added a layer of complexity over and above the law is too simplistic and fails to recognise that this was done in response to the regulatory scrutiny that came their way (RG 515, the Hayne royal commission, ASIC pressure etc).

Unity

As an industry we have made huge strides with associations like the Financial Planning Association, the Association of Financial Advisers and the SMSF Association working closer together to represent the views of the industry. Yet we need to further capitalise on this and, much like the mortgage broking industry, agree on a set of priorities we want to address as an industry.

On a professional level, advisers have long held the view that those who have never sat in front of a client should never advise them on what to do. Whilst I do have some sympathy for this, I have seen a lot of advisers struggle in the reverse situation. It all comes back to empathy, respecting the contributions of other professionals, better listening and engagement.