David Sharpe

It may only be February but the theme for the 2023 is focusing very clearly on making it easier for financial advisers to serve their clients and, critically, for clients to have access to advisers.

While there have been no immediate changes introduced yet as a result of the Quality of Advice Review, there has been almost universal acknowledgment that there must be systemic change in order for the system to work – both for consumers and for planners. This can’t just be tinkering at the edges. There is a need to simplify the many layers of unnecessary regulation that stop Australian consumers getting the advice they need.

We can’t know for certain what changes will or won’t be introduced as a result of the advice review, however we are heartened by financial services minster Stephen Jones’ comments that he is looking for “quick wins” and that compliance that adds no benefit to consumers should be removed.

If the minister is looking for quick wins, three recommendations in the review appear to have widespread support – removal of Statements of Advice, simplification of fee disclosure and consent, and unwinding of unnecessary obligations on advisers in relation to the Design and Distribution Obligations. Importantly these aren’t co-dependent on other changes occurring within the review. I call on the minister to keep the momentum going and to push ahead as quickly as possible with these recommendations. These changes respect the universal uplifting in professional obligations across the profession and allow us to use professional judgement.

Arguably the recommendation that is causing the most angst with our members is the concept of non-relevant providers offering advice. It’s particularly concerning because, at great cost, advisers around the country have achieved or are pursuing a suite of professional standards aimed at protecting consumers. Now it appears there is consideration of allowing advice from those not educated, ethical, experienced or examined to the same level as financial advisers.

It’s important to understand the challenge review lead Michelle Levy is aiming to solve: less than 16,000 advisers servicing a population over 25 million. Even if our numbers doubled, we still aren’t going to be able to service all Australians who want advice, sometimes very simple advice. It also isn’t unheard of for non-practitioners to provide advice.

The medical profession provides a good analogy to this idea. For instance, medical advice doesn’t just come from a doctor – it comes from many health care professionals (albeit most with some level of training). We know that if we want Panadol and Nurofen it doesn’t take a doctor for that advice – why? Because although there remains some risk, that risk is considered negligible compared to the inefficiency (and expense) of requiring a doctor to agree every time.

The FPA has previously stated it would consider the potential for non-advisers to provide advice, but not at the whim of the product provider. There need to be guardrails limiting potential detriment to consumers before such an option could be implemented.

As an example, it wouldn’t be appropriate for a non-relevant provider in a call centre to recommend someone with an accumulation account to roll over to a pension. Sure, there might be tax savings, but have they considered the impacts on social security, estate planning, longevity and sequencing risks, and cashflow requirements? The impact of poor advice here could be profound, amounting to tens of thousands of dollars. The complexity of this advice is why we as advisers spend many years studying and many hours keeping our skills and knowledge sharp. If they want to give this advice, it must be necessary for them to do the work required to become an adviser.

Alternatively, consider the scenario where someone calls up their super fund and asks about a co-contribution. That’s the only advice they want. The reality is, this is unlikely to be a client we are able to service (and many colleagues have told me they have closed their books). But this person still wants advice. In this case, it would be relatively simple advice, with low potential to be detrimental to the consumer if it goes poorly, but it does mean the consumer gets the advice they need. Could this type of scenario be the financial planning profession’s equivalent to the medical profession’s Panadol and Nurofen? Perhaps, but even so, the provider would need a level of training and supervision. Again, appropriate guardrails need to be in place.

We look forward to working with the minister to ensure appropriate protections are put in place for consumers but that also allow them to benefit from advice in a manner that is appropriate to them.

I also want to thank Michelle Levy for both her genuine engagement with stakeholders and good faith in trying to come up with practical recommendations, many of which will make a positive change for advisers and their clients. Where there are recommendations that need greater exploration, it is important that we show genuine engagement and don’t simply throw the baby out with the bathwater. Doing so greatly risks the momentum building that will have significant benefits to planners and allow us to better and more simply serve our clients.