Speaking on Ausbiz last week, Financial Advice Association Australia (FAAA) chief executive Sarah Abood said that while super funds providing simple advice through a new class of advisers could help serve the “missing middle”, clients may not be aware that they are not receiving comprehensive advice.
“We want consumers to know that [comprehensive advice] is available and that’s the best quality advice you can receive,” Abood said.
“It’s tailored to your goals and objectives as well as your own situation. Now, for some people, it might be that all they want is a bit of simple information about the fund that they’re in. And that’s fine. There are no problems with that.
“I think the danger comes if people think that they’re getting comprehensive advice and what they’re getting is just this very limited service. Comprehensive advice is intensive, there’s no getting away from it, but it’s also a service that is tailored to you, and we believe will give you a much better outcome than just that single-purpose advice.”
She acknowledged that there are a lot of consumers who are struggling to actually access advice due to the much lower number of financial advisers remaining in the profession, but “people need a bit more than just what investment options do I have available to me”.
“It’s being referred to as the missing middle, and that’s the vast majority of Australians that have a need for a bit of help, and that is not available at the moment. So this new set of legislation that we hope to see soon is called Delivering Better Financial Outcomes, tranche two, and we’re hoping to see that legislation coming through soon, and that will add another type of advice to the equation.
“We’re hoping that it doesn’t confuse people further, because there is a need to serve people that currently don’t have access to advice, but we’ve got to make sure that people understand what they’re getting.”
Last week, Chant West general manager Ian Fryer argued that this “missing middle” should be getting more help from their super funds regarding their pre- and post-retirement planning.
“Super funds need to do more to assist members in transitioning from the accumulation phase to the decumulation phase. People need to understand how much they can draw down in retirement and how they should be invested,” Fryer said.
Given that the optimal outcome will depend on each member’s situation, they need tailored financial advice.
“Indeed, the best way to deal with retirement planning is through financial advice. To get tailored advice, it might cost about $5,000. But many super fund members would not want to or be unable to pay this much,” he said.
While Fryer suggested that digital advice could be the key to super funds providing more retirees with personalised financial advice, Abood said the key element is Australians understanding the different “flavours of advice” available and making sure they can tell the difference.
“I think it’s hard for consumers sometimes to distinguish what are the different kinds of advice I’m getting? What are they costing me, and is this what I need?” she said.
“So, for us, it’s really all about trying to explain that there are forms of advice, from no advice to general advice, intra fund advice, comprehensive advice, and potentially soon, a new class of advice. And I think consumers need to understand what those different kinds of advice are and how they can potentially benefit.”
Why are people still paying FAAA membership fees?
Or CFP ‘fees’ for that matter.
The rumour is that the FAAA was a Treasury NDA signatory.
Most independent financial advisers I’ve spoken to have already or are in the process of cancelling their FAAA membership because they have already let the horse bolt on the subject of “qualified adviser” nomenclature.
Australian Retirement Trust has already changed their website and are using the term Qualified Adviser.
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Fait accompli
Show me.
“New Class of Adviser” = Old class of sales rep
If we’re looking at the main issue at hand, which is the lack of access to financial advice to Australians, then the new class of adviser makes sense. I see a lot of comments here from advisers feeling threatened by this strategy. It’s not all about you and your bottom line, there’s a bigger issue at hand here.
There wouldn’t be an issue if the regulations were efficient, to allow advisers to service more clients. This would then attract far more entrants into the industry too. The issue you refer too is completely made up.
You’re clueless. Advisers are acting of interest for Australians and not self interest. Your comments are both clueless and wrong. I don’t want more clients, I”m turning away Australians and I’m not prepared to see my fellow Australians getting inapprprioate SH$@$% t advice via a Super fund.
Legislation and regulations have been put in place to “protect consumer” from “consumer detriment” arising from “Conflicted advice” remember? If you don’t agree with the legislation and regulations placed on real Financial Planners, then just drop it. This “main issue at hand, which is the lack of access to financial advice to Australians” being used to justify some special “new class of adviser” who don’t have the same legislation and regulations to follow is just madness IMPO? Perhaps this problem of lack of affordable advice for Australians has been created simply for the “new class of adviser” solution?
Following your logic, how about a new class of Medical Doctor, paid for by Drug Manufacturers, and the general public can just ring then and get direct access to medical advice on that manufacturers product – what could possible go wrong?
“Following your logic, how about a new class of Medical Doctor, paid for by Drug Manufacturers, and the general public can just ring then and get direct access to medical advice on that manufacturers product – what could possible go wrong?”
This!
“It’s not all about you and your bottom line, there’s a bigger issue at hand here.”
Do you mean it is not all about Product Providers protection of FUM and their bottom line – or in the best interests of members? I seem to recall a Product Provider giving evidence in the Hayne Royal Commission that spending members money on advertising to get additional members was in the best interest of members as additional FUM meant better efficiencies? Correct me if I am wrong – it seems so long ago – particularly as we now seem to be in a time where product providers using agents/staff to provide advice is now seen as a good outcome – but only for a “new class of adviser”?
Faaa should force government via education and campaigning to media, to release the feedback for tranche 1. I hazard a likely guess that there are MANY examples of MORE Appropriate Naming Conventions.
I’d love to see the evidence about how these were so flagrantly and deliberately ignored. This would be a very clear audit trail of government and Treasury being fed Appropriate and positive ways to process, that were then hidden and buried, disregarded and eventually replaced by failures poorly written tranche 1 legislation littered with errors.
The other major confusion is between “advice” & “service”. We now have confusion about “fees for no service” when referring to “advice”, when the reality is that Retail Advisers are having difficulty getting paid for the “office admin services they provide for no fees”. When did outsourced admin service support become “advice”? Absolutely clear as mud for the millions of Australians who cannot even access service support any longer.
Simple fix, don’t call them advisers. Call them what they truly are conflicted product representatives, then clients would be clear they are receiving inferior and conflicted information, not advice.
This whole mess is a scam, really. Clients and Advisers are being forced to pay fat-cats in the bureaucracy.
What would I know, I only have decades of experience and professional qualifications.
The FAAA and Sarah Abood appear fundamentally misguided in their focus on “market confusion” as the primary issue here. The real and urgent concern is the blatant assault on the independent financial advice sector—a direct threat to the livelihoods of FAAA’s members.
The new class of adviser (NCA) is not simply about serving the “missing middle”; it represents an orchestrated move by industry super funds to undermine the independent, for-profit advice space. This has been a long-term strategy by industry super funds, beginning with the abolition of investment commissions—a key driver behind the halving of the financial advice sector. It continued with relentless adviser smear campaigns and the attempted imposition of regulations like s99FA, which require every SOA fee to be scrutinized, and now culminates in an NCA with significantly lower education standards and a “free” advice offering to consumers.
How does the FAAA expect its members—qualified professionals operating in a for-profit model—to compete with industry funds that market their advice as “free” and have lower barriers to entry? This isn’t confusion; it’s systemic sabotage.
The FAAA must recognise this for what it is: an organised, coordinated war on the independent advice profession. Focusing on “confusion” distracts from the existential threat posed by industry super funds’ clear intent to dominate the market. The FAAA must stop tiptoeing around the issue and take a principled stand to defend its members and their businesses.
It’s time for the FAAA to wake up, show backbone, and truly fight for the survival of its membership. Anything less is capitulation.
FAAA has bigger plans, much bigger than you can imagine (hint: it does not include advisers)
Hard to fault your comments. What gets my goat is why the FAAA, ASIC, Treasury etc chased “Conflicted Renumeration” leading to “Conflicted Advice” being bad for retail clients – leading caused consumer detriment – but now “Employed Qualified Adviser” paid by the product manufactures is now all in the consumers interest? What happened to all those comments about “Community expectations” and if the consumer wants advice, then the consumer will be willing to pay for the advice? Seems rules have been made to build a moat around the Product Providers members? The FAAA needs to be replaced with a much more professional organisation IMPO?
Yeah, what’s the story with the FAAA? They seem completely disinterested in their members’ interests.
Nah, the FAAA will offer a new class of membership and sign up the backpacker product sales reps. They will then hit their bonuses for growing membership.
And the Industry Super funds and Institutions will pay on mass for the BackPackers FAAAAAAAAAAAA membership fees.
And the bad old Product flogging based FAAAAAAAAAAAAAAAAAAAAAA is right back where it has always had its heart.
It hasn’t come into affect. Why are we discussing this? It may never occur. If it does, then the client will decide. Why does the FAAA think they are relevant?
So we don’t have Unqualified BackPackers Product Sales Agents called :
Qualified Advisers.
That’s why.
Because the draft legs are due before Xmas according to today’s announcements