Stephen Jones (left) and Conexus Financial founder Colin Tate

While red tape reduction will be a breath of fresh air for the advice profession, there is concern from the Government about whether advisers will pass on cost savings to clients or be willing to take on more clients.

Speaking in Melbourne on the last leg of the QAR roadshow hosted by Conexus Financial in partnership with Allianz Retire+, Minister for Financial Services Stephen Jones pointed to five million Australians near or at retirement that need advice, with fewer than 16,000 advisers to service them.

With advisers averaging roughly 100-150 clients each, they would have to double or triple their client base to cover the advice gap identified by Jones.

While the Minister sees the benefit of appeasing advisers by making their lives easier, he thinks the advice review alone doesn’t solve the accessibility issue because red tape reduction doesn’t guarantee any incentive for advice practices to lower fees and take on new clients.

For this reason, Jones didn’t want to make any “heroic claims” that the red tape reduction proposals will improve consumer affordability.

“If we do this regulatory efficiency piece and, as a result of that, your financial advice fee will halve – I’m not going to [say that] because I don’t think it’s going to happen for the majority of Australians,” Jones said.

“Even if it did it would be a nice surprise, but not one I’m going to promise. There’s the potential for significant savings and I hope if professional advisers realise those then some of them will be passed on, but I’m not going to make any reckless claim about that.”

The Minister is happy to remove some of the key red tape obstacles he has noted during the week on Monday in Sydney and Tuesday in Brisbane. However, his expectation is it won’t solve the affordability and accessibility issue the advice review set out to accomplish.

“At the very least within the advice profession we are making it easier and simpler for people to provide advice, that the regulatory obstacles which aren’t providing any consumer protection are removed and you can get on and do the job you need to do to provide the advice to your client group,” Jones said.

“But nobody should think that if we just do that, then that’s job done.”

And that’s why super funds will be involved

Although Jones hasn’t expressed support for advice review lead Michelle Levy’s proposal to allow non-relevant providers who work for a relevant provider give advice, he believes super funds do have a role to play in giving advice.

“Not all those five million need comprehensive, complex advice,” Jones said. “Many of them, their financial affairs are pretty simple, straightforward, so there has to be a role for institutions to provide information,” he said.

Asked whether he supported super funds being the major supplier of advice and information, based on the number of individuals served, Jones said they’re already providing large-scale advice.