The Financial Planning Association of Australia (FPA) has been among the organisations to back much of the QAR final report, however, on a recent episode of the ifa podcast, chief executive Sarah Abood explained that there are limits to that support.
“Overall, we remain supportive of the review, and we remain supportive of the report. That doesn’t mean that we love everything in it or we think it’s entirely perfect. We don’t,” Ms Abood said.
“We have some suggestions on ways that some of the recommendations I think can be tailored and be made better to achieve the overall goals. And we’ll continue to do that.
“The minister has signalled that he’s keen to hear what the perspectives are on the report. I don’t know exactly how that’s going to be constructed, but we’re certainly keen to be involved in that and to put the viewpoints forward that our members are strongly expressing to us.”
She added that FPA members are particularly supportive of the recommendations that are likely to reduce the cost of advice.
“That has a double whammy impact because, of course, it does make advisers’ lives much better. It reduces the cost to do what they do, and the time, and the effort, and the red tape involved in it,” Ms Abood said.
“It also has the impact of lowering the cost to consumers of accessing what we know is the best quality advice that consumers can access.”
What the FPA is wanting to see is quick implementation of elements of the report that have widespread support, while those requiring deeper work are considered further — the latter category encompassing recommendations addressing product issuers.
“That area is big. We really need to think through how that would play out, and I think that probably requires more time. So, it’s kind of an impact analysis. Let’s do the easy, quick things. Let’s do them quickly now and let’s do the work that we need to do on the bigger proposals,” Ms Abood said.
Specifically addressing the possibility of product providers also dispensing advice, Ms Abood said there need to be “guardrails” in place.
“When you read the text of the report, I think in our reviewer’s mind, what is happening is that many of the activities of large institutions that were previously defined to be general advice are going to be pulled into this new definition of simple personal advice. So, the bar I think in [Michelle] Levy’s mind is being set higher for those kinds of activities,” she said.
“I think what we need to do is talk about […] the guardrails that need to be in place to ensure that consumers are very likely to get advice that’s good for them and will leave them in a better position. And I think that’s a laudable outcome,” Ms Abood added.
“The reality is, many of our members are not set up to, and by and large, are not advising people on small one-off questions like that … As the situation becomes more complex, as their life situation demands full personal advice, they need to talk to an adviser, and they do.”
Ms Abood explained that the FPA would like to see non-relevant providers, providing simple episodic one-off advice, enrolled in a course of study that would potentially lead them to becoming a financial adviser over time. The group would also like to see these providers supervised by a relevant provider who could “play a role in ensuring that that advice is not leading consumers off track”.
“And that’s our suggestion. Others have had other suggestions,” Ms Abood said.
“The other advantage I see is that this creates a pool of people who have the education over time to become full service financial planners and to provide that broader, more comprehensive advice to consumers over time.
“To my mind, that is desperately needed. Our numbers are way too low. We’ve declined over 45 per cent since 2019. We really, really must have more financial advisers to give better outcomes to Australian consumers. So that’s one reason why we think this proposal is worth considering and could have multiple advantages.”
Hear more from Ms Abood here.
““The reality is, many of our members are not set up to, and by and large, are not advising people on small one-off questions like that …”
There are 16,000 Financial advisers already. What is with the fascination of allowing unqualified people to give financial adviser in any aspect? If compliance requirements are fixed/made efficient then advisers can certainly choose to service this part of the market at a reasonable cost, which means they can go from serving say 150 clients to 500+ (simple advice) clients very easily, a bit like the GP model. That might even entice more qualified people to join the industry too. It might even be such a success that you can mandate no planners/advice providers to be employed by product providers. If there were 20,000 advisers, servicing 300 people, then that is 6 million people. How many Australians do we expect will need advice or want advice? The focus should be on growing the pool of qualified advisers!
Why would the FPA support any of this – what is good advice, why is the industry super fund allowed to provide advice, why are banks who caused so much death and destruction allowed to provide advice. Will you dismantle Best interest duty and the FASEA code of ethics. If not – Stop this QAR review. It wont work.
Ms Levy is an agent set up to get them back in the game. Highly conflicted review and not in the client’s ‘Best Interest’