As the clock counts down to the deadline for the government’s Quality of Advice Review, new CoreData research shows there’s a high level of scepticism among financial advisers about whether the review will achieve the aims set out for it.

CoreData’s latest quarterly Adviser Pulse Check Survey shows that a significant majority (83 per cent) of advisers are not confident at all or not very confident that the review will improve the quality of advice.

But frankly, the quality of financial advice has never really been the major issue holding the profession back, despite the name given to the latest in a long line of reviews. The more pressing issues are the accessibility and affordability of advice. Both these things have taken a downturn as the cost of advice has continued to escalate.

Ironically, the declines in both affordability and accessibility have been driven in no small part by legislation designed to do precisely the opposite.

Remember the Future of Financial Advice (FoFA) reforms? Treasury’s website says the objectives of FoFA were to “improve the trust and confidence of Australian retail investors in the financial services sector and ensure the availability, accessibility and affordability of high-quality financial advice”.

FoFA did some good and necessary things. It didn’t make advice more affordable, and it didn’t lead to people flocking to advisers’ doors. But we digress.

A significant proportion of advisers (89 per cent) are not confident at all or not very confident that the review will improve advice affordability, and nine in 10 (91 per cent) are not confident at all or not very confident it will address accessibility.

That’s not to say the review won’t succeed in addressing both these issues, and more. It might, and it’s best to reserve judgement until we see what the review recommends and the factors it considered in making those recommendations.

It’s just that at this point of the process, the review doesn’t have the confidence of advisers. They’re overwhelmingly not confident that the review can achieve several other key outcomes for the profession either.

And that’s a shame, because around three quarters (73 per cent) of advisers strongly or somewhat support the review, so there’s no lack of goodwill within the industry for the review to succeed.

If review lead Michelle Levy makes the right recommendations and if those recommendations are accepted and implemented effectively by government, it could represent a great step forward for a professional that has perennially struggled to service more than around 15 to 20 per cent of the adult population.

Making advice more affordable and accessible would mean it could be offered at a price that doesn’t put people off seeking it, and offered to them at a time in their lives when it is likely to make a noticeable difference. And the more people who receive high quality advice and understand its benefits, the better off they will be and the better off the profession will be as these new experiences are discussed with families and friends.

Of course – as we discussed here a few weeks ago – increasing demand for financial advice is a fine objective, but there are clear issues around the supply of advice and the capacity of advisers individually to take on many more new clients.

But what a problem to have.

4 comments on “Affordability and accessibility of advice unlikely to improve: CoreData research”
  1. Avatar
    Jeremy Wright

    Any Quality of Advice review is welcome, conditional that it is run by competent people who actually understand what it is they are reviewing and who also have the experience to know a good suggestion from a bad one.

    What we have had to endure and the subsequent devastating impact all Australia is facing, comes down to a simple answer and it is endemic in all Western democracies.

    We have been hoodwinked into allowing the control of our Business lives to be handed to the Legal / Compliance fraternity, who, quite frankly, have NEVER understood how the REAL world works and their modus operandi for going on two thousand years, has been to hide behind legal interpretation, opaque Laws and Regulations that only their secret society must understand, otherwise why would we need them.

    After World war one, Britain was struggling to pay off it’s debts and it’s economy was in bad shape.

    From a legal practitioners perspective, Barristers were finding their revenue streams declining, though luckily were able to make sure that if a person needed to go to Court, then it was mandatory that a lowly Solicitor could not represent their client in Court, they needed to pay for a Solicitor, who briefed the Barrister and like the Castle, many hours, days, weeks, months could be spent, paid for by the poor client, so the elite class whose brotherhood just happened to be the Judiciary, could interpret, discuss and provide intelligent legal perspective that only they could understand, then come up with grand solutions, costing millions and in the Financial Advice sector, creating a legal maze, that has led us all to the current economic malaise so all Australia has ended up with what our Industry has been through, A TOTAL SHAMBLES.

    So now, after being beaten over the head for a decade and the supposed cure has been proven to be far, far worse than the ailment, what have we allowed ourselves to occur again?

    We have asked that the same Industry that created the chaos and who have vested interests for this madness to continue, to once again be the answer to our problems.

    If your tormentor, who has held your head and bashed it into a wall continually, then comes up with a solution for your headache, is to still bash your head into the wall, though he or she will do it at different times, with the same intensity, it somewhat defeats what the true purpose of this treatment and end result is supposed to be.

  2. Avatar
    Rob Alexander

    This review and the outcome is all about providing exemptions to the rules on the provision of advice to Industry funds and other product manufacturers/distributors – nothing more. All the rhetoric is just smoke and mirrors.

    1. Avatar

      This review was initiated by the Coalition so Industry Funds wouldn’t have been a motivator. Some have suggested it was in pursuit of Jane Hume’s ideology around tech advice solutions, seemingly her best idea around access and affordability.
      We all know that 2 things are needed – Step 7 of the safe harbour steps to be removed so that limited and episodic advice becomes viable for licensees to provide and, ASIC’s wings need severely clipping to reduce the focus on compliance and allow licensees to shift it to providing clear, concise advice to the objects of Chapter 7 – the consumers.
      The first is unlikely as Stephen Jones thinks the safe harbour is great as is, the 2nd unlikely as what does that look like in practice?

  3. Avatar

    As welcome as the review of the regulatory and compliance burden is, can’t help but feel it is a little like putting toothpaste back into the tube – theoretically possible but likely very messy and time consuming.

    And speaking of unintended consequences, once any changes from this review eventually flow through, advisers will again be forced to amend processes and procedures. Fun times indeed!

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