Andrew Inwood (left) and Ben Marshan

With so many abstract figures thrown around claiming to show the average cost of advice, the Joint Association Working Group has partnered with CoreData Research to identify the broad-spectrum of advice costs.

The research will be used as an evidence base to show Canberra the full breakdown of what advice costs to deliver and the impact made by various regulatory changes.

Coredata founder Andrew Inwood tells Professional Planner the goal is to create a nuanced model that can be modified depending on the advice given.

“You can’t say the average cost is the real cost because there is no average,” Inwood says.

Inwood pointed to research from consultancy firm PwC that showed the cost of advice is $3,200 while research from Industry Fund Services found it was $3,458 as examples that lack the nuance they are trying to uncover.

“We’d say to who? Is it someone setting up an SMSF, someone retiring, selling a business; those numbers don’t make any sense.”

Inwood showed Professional Planner the full spectrum of data collected – it doesn’t leave a stone unturned, not just the cost of providing statements of advice or purchasing advice software, but even down to details like utility costs and staff transition/onboarding.

“Some businesses can answer that really well; some businesses are really confronted by it because they’ve never thought about it like that,” Inwood says. “What this is going to enable the joint associations [JAWG] to do is have an evidence-based conversation with the regulators and the government about what the cost of advice is.”

More welcome to the party

Financial Planning Association head of policy Ben Marshan says fundamentally the research just wants to answer the question about what advice costs to provide. He encourages licensees and practices to reach out with their own data.

“Everyone complains about how much it costs to create a statement of advice but there is has been very little work to sit down and figure out exactly all the cost inputs.”

Marshan says the Quality of Advice Review offers the perfect opportunity to identify the consumer protections that are working and what isn’t adding value.

“If you’re going to start to make decisions about which consumer protections are value for money and make sense and which pieces are incredibly costly and aren’t driving any change in the outcome for the consumer, you need to have an evidence base to have those conversations to the government.”

Added costs