The first week of September saw Quality of Advice Review lead Michelle Levy joined Conexus Financial managing editor Julia Newbould to discuss her proposals.
Naturally, the biggest concern about Levy’s recommendations – and the advice review as a whole – is the potential for large institutions like the big banks and super funds to give advice that could be potentially conflicted.
Levy has attempted to quash any concerns, saying her ‘good advice’ regime will prevent advice that’s not in the best interest of the consumer being given.
“The point of my proposal is to look at the content of advice and then it is up to the provider of the advice or the licensee to decide what is it that [they] need to do to be reasonably satisfied this is good advice,” Levy said.
Additionally, best interest duty wouldn’t be completely repealed.
“The best interests duty in the Corporations Act would be repealed, but there would still be a best interest duty under the Code of Ethics.”
A joint submission to the advice review from consulting firms Encore Advisory, Finura Group and Tangelo Advice Consulting argued that relevant and non-relevant providers should be regulated separately.
“It’s the concept of making it clear to the client what model they’re engaging with and where it is the restricted model or the independent model,” Encore Advisory executive chair Tom Reddacliff said.
The FPA and CoreData commenced undertaking research to establish the full spectrum of advice costs.
“You can’t say the average cost is the real cost because there is no average,” Coredata founder Andrew Inwood told Professional Planner.
After the Quality of Advice Review ‘good advice’ proposals was revealed at the end of August, the Financial Planning Association and Association of Financial Advisers scheduled a joint media briefing to discuss the recommendations.
However, it was slightly misdirected as both associations used the opportunity to announce their intention to explore a merger.
A member vote is planned for 2023 which will require 75 per cent of both membership bases to approve.
“Coming together will no doubt strengthen our voice to stakeholders and significantly increase the likelihood of achieving crucial advocacy positions, which is vitally important to members of both organisations,” AFA national president Sam Perera said.
While Levy’s full suite of proposals sought to make advice more accessible and reduce red tape for advisers, research from Investment Trends found a quarter of advisers planned to leave the industry in the next five years (before the 2026 education deadline).
“Whenever we talk about advisers leaving the industry, there’s always an element of those advisers that are reaching retirement age,” Investment Trends research director Dougal Guild said.
“We do know the regulatory environment more broadly and compliance considerations associated with that consistently come up as the main challenges advisers face in their practices and has been that way for many years now.”
The research was released just days after the latest adviser exam results were released which saw just over 50 per cent pass.
The results of that exam were significant as it was the final exam before the 30 September cut off. If an adviser had not passed the exam by that date, they ceased to be a financial adviser.
This meant by the end of the month hundreds of advisers would have come off the ASIC Financial Adviser Register and cease giving advice.
FPA chair David Sharpe wrote a heartfelt open letter to the advisers that would not be registered beyond the next month, expressing empathy and encourage to find a different way to add value to the industry.