If we could gaze into a crystal ball, what would a post-Quality of Advice Review (QAR) advice landscape look like? Would advisers be jostling for space with super funds and other providers, carefully protecting their client base from being poached?

Or would the client segments be carved up more neatly?

Advisers would continue to focus on segments that they can service efficiently, given the cost to serve. Traditionally, these are the high net worths and, increasingly, as technology enables greater efficiencies, the mass affluent. Other advice providers such as super funds would then be focused on the mass market – the majority of Australians who need advice, but currently cannot access or afford it.

Flowing on from this, how would consumers be made aware as to the nuances between the different providers? The quality of advice has been strengthened over a number of years as a result of the move towards the professionalisation of our industry, through an uplift in education standards. It makes sense to distinguish financial planners – who must meet specific standards and have the capability to offer a service beyond limited advice – from other potential advice providers.

To address some of the concerns advisers have raised since the final report of the QAR was released, this article discusses the rationale for opening up advice. It also explores how the financial advice label could be applied.

My prediction is that, if the QAR recommendations are implemented, advice will be more accessible for the vast numbers of Australians who are currently missing out. Typically, it does not make business sense for advisers to service customers seeking limited or simple advice solutions, and so competition in this specific area between advisers and super funds, I expect, would be minimal.

Some of these Australians might find, after receiving advice from their super fund, that they need the next level of service which financial advisers can provide, and therefore the potential target market for advisers will expand. Far from being threatened, advice practices will continue to thrive.

Super funds

When the final report was released in February this year, some in the industry raised concerns about the proposed ability for superannuation fund trustees to provide more advice to their members.

Before I turn to some of those queries, it is important to remember what the review was tasked to achieve: to investigate the impediments preventing consumers from accessing affordable quality advice; and to provide recommendations around this.  There are three key elements here: access, affordability and quality.

It is almost impossible to look at these elements in isolation as they are intrinsically interrelated, but at a high level what I am sure everyone could agree on is that all Australians should be able to access advice if they seek it. Whether they take up the opportunity to access advice is another matter, but they should at least have the option to access advice.

Around 670,000 Australians intend to retire in the next five years (with 220,000 doing so in the next two years)[1] and the main factor that will influence their decision about when to retire is financial security. For many, we know that one of their most valuable assets, as they approach retirement, will be their superannuation. Saving towards retirement, and the appropriate use of those savings is important, and many Australians can benefit from getting financial advice so they can plan to achieve their financial goals and enjoy their retirement. Superannuation funds are well-placed to assist in this area.

One of the concerns that has been raised in this area is that the superannuation funds might be poaching clients from advisers. Whether or not this is true could come down to the strength of the client-adviser relationships and the value the client sees. Advisers with trusted relationships will no doubt be used to fielding questions from clients who may have seen or heard something that sounds appealing, only to have their adviser point out the limitations or potential broader implications. In the case of seeking limited advice, the adviser many need to point out that the advice is potentially limited to their interest in the fund and not their overall circumstances.

The expansion of advice