Here’s the glass half full view of the financial advice industry: Red tape will likely be reduced, making advice more affordable and accessible. However, affordability will not come at the expense of quality, and high professional standards will be upheld.

The adviser of the future will be a financial coach for loyal clients, and their relationship will be more values-based rather than transactional. Consumer trust will be reinstated. Hard earned lessons on operational efficiencies will increase profitability. The cream of the crop in Australia will become attractive targets for multinational finance companies looking to expand into advice in our region.

The glass half empty view is a familiar narrative: An industry in decline. Consumer trust is at a low ebb. Adviser numbers dwindling as the mass exodus continues. The stoic few who are left behind face the daily struggle of meeting compliance obligations, while keeping on top of volatile markets and attempting to cut operational costs.

I am an eternal optimist. After the mightiest of thunderstorms that has shaken the advice industry to its core, the future looks bright.

So, let’s focus on the silver linings.

Reducing regulatory complexity

The proposals put forward so far as part of the Quality of Advice Review signal a turning point in the advice regulatory landscape. Here are three examples.

If current proposals are accepted, the requirement to prepare statements of advice (SOAs) and records of advice (ROAs), which can be costly to produce, will go. Under Proposal 9, providers of personal advice to retail clients would be required to maintain complete records of the advice they provide, and to provide a written record of advice to a client on request. However, there is no requirement for this to take the form of an SOA or ROA, which can become unwieldy documents.

There are further proposals aimed at providing the industry with greater flexibility in complying with disclosure requirements. Under Proposal 10, advice providers will be able to direct clients to a copy of the Financial Services Guide (FSG) via their website at the time advice is provided, rather than constantly determining whether a client has a copy of the current FSG.

Changes have also been proposed to annual fee consent procedures for ongoing fee arrangements. While only a relatively new obligation, under Proposal 8, the requirement to provide a historical fee disclosure statement that will detail the services and advice fees incurred for the preceding 12 months would be removed. What would still be required, however, is the forward-looking fee disclosure statement, outlining the services proposed to be delivered and fees proposed to be charged for the next 12 months, and the requirement to obtain the client’s consent to deduct those fees from the relevant products.

Professional standards maintained, with pride

The proposal to remove the best interests duty under the Corporations Act and replace it with a requirement to provide good advice (Proposal 3), alongside the expansion of the definition of personal advice (Proposal 1) and the removal of general advice (Proposal 2), has led to a great deal of discussion. Potentially, there would be two tiers of advice providers, and the standard that applies to financial advisers will be higher compared to others who offer personal advice. Financial advisers, as relevant providers, would still need to meet the best interests requirements under the Code of Ethics, such as Standard 5 requiring that all advice and product recommendations are in the best interests of the client.

Nearly all advisers on ASIC’s Financial Adviser Register have passed the FASEA exam (95 per cent as of August 2022). The professionalisation of advice, with ethical conduct at its centre, should be worn as a badge of honour. Under the new proposals, I think advisers will have the opportunity to present themselves with renewed clarity and conviction. Consider this statement as a message to your potential clients: “As financial advisers, we are held to the highest industry standards. We have the capacity and qualifications to give you advice that’s designed for you and with your interests at the heart, to empower you to make great financial decisions.”

Being a member of the top tier of the advice industry could make financial advisers more marketable.