While the number of those wanting advice increases and the number of practising advisers decreases, it’s commonly agreed that Australians seeking financial advice may encounter barriers beyond just the steep costs.
Speaking recently on the ifa Show podcast, director and founder of Forte Asset Solutions Steve Prendeville said that while he believes that “everyone does need advice”, he also strongly agrees that people “need a specific piece of advice at a certain time”.
“A lot of it is event-driven,” Mr Prendeville explained.
“Not necessarily do people need ongoing, continual advice unless they’re coming into really complicated periods of time”.
Expounding on this, Mr Prendeville explained that peace of mind at retirement is a key component of needing access to advice at the latter stages of one’s life. But, he noted, the projected continued growth in superannuation assets is testing the industry’s capacity to accommodate Australians looking to navigate their finances.
“We’ve got 700 Australians retiring every day. We’re seeing $70 billion transfer from accumulation to retirement per annum. Then by 2026, which is not too far away, we’re going to have 137,000 Australians every year turning 65,” Mr Prendeville said.
“This is part of where the need for advice has never been greater.”
Moreover, Mr Prendeville worried that operational costs and inefficiencies in the “back office” restrict the capacity of today’s already small pool of qualified financial advisers.
“The thing that’s missing is the ability and the capacity to take on growth. We’ve seen organic growth out there. It’s just the ability to actually capture it, I think is their greatest issue, and will remain so for an extended period of time,” he continued.
“We’re seeing increasing costs, somewhere around, on average, 16 per cent over the last 12 months.”
“I think that if we can free up the back office, which I really hope the Quality of Advice does, I think we’ll be able to take up more of the capacity that will be released within the marketplace. The need is great.”
Looking into the future and whether the QAR will make advice cheaper to access for consumers, Mr Prendeville admitted that “the genie is out of the bottle” with regards to pricing.
“I don’t think that they’re [advice practices] looking to reduce costs any time soon. I think the reduction of cost will be purpose-built, predominantly algorithmic advice,” he said.
“It’s going to be well-priced, event-driven advice. Limited to a certain event. Because all Australians should have access to that,” he concluded.
Yes – it is possible – remove the unnecessary red tape which is not helping anyone. How difficult is it ???????
“It’s going to be well-priced, event-driven advice. Limited to a certain event. Because all Australians should have access to that,”
Remind me, why were commissions banned?
It will be free advice…just watch out for the hidden fees in the PDS which we know clients won’t read.
While Steve is correct, what he is missing is the bit about advice being given by product providers. Is this advice, or is it just sales??
It’s sales advice!