The UFAA (United Financial Advisers Association) has proposed an industry study to assess the consequences of legislation changes that have already taken place.
The body has urged the government to take stock before it undertakes any further action with respect to LIF, FASEA, or remuneration and professional standards, with UFAA chair Alex Vagliviello saying the toll on advisers has been immense.
“Very few industries can relate to the two decades of relentless legislative and regulatory changes experienced by financial services, especially the advisory sector,” Mr Vagliviello said.
“In addition to issues of adviser mental wellbeing, the legacy of constant change has included industry rationalisation, less competition, reputational damage, decimation of advice business values, exit of advisers and advice becoming unaffordable.”
The UFAA has two key objectives for its proposed review: understanding mental health issues and consequences and providing context for legislators and industry associations to better understand the human consequences of future reform.
“The damage done to the sector in terms of advisers that have left the industry and their financial and mental health has been nothing short of catastrophic,” Mr Vagliviello said.
“However, there remains a tiny slither of time in which to bring the situation back from the brink – especially in the current environment where the services of experienced practitioners have never been so needed by so many people and businesses in financial distress.
“Losing advisers now would be no different to losing doctors in the face of a pandemic.”
The regulators’ “obsession” with reform has devastated previously profitable business models, the UFAA stated.
The body has criticised the FASEA exam as being opaque in application and “meaningless” as an academic industry entry requirement, with no resulting industry accreditation or use as a CPD requirement.
Mr Vagliviello added that “constant tinkering” with remuneration structures has seen value of practices plunge and the “unjust vilification of all advisers for the sins of the few added to distress”.
“These factors are deterring the next generation from considering a career in advice, further jeopardising the viability of the sector,” he said.
Former adviser and industry advocate Barry Daniels weighed in, saying one of the most disappointing aspects of the past reform has been the government and industry not acknowledging and addressing mental health issues for advisers.
“Advisers are literally fatigued and the prospects of further reform [are] the final straws – especially for mature age advisers,” Mr Daniels said.
“Incessant reform brought about the perfect storm that was further escalated with the demise of practice resale values and BOLR arrangements that were supposed to fund retirement aspirations.
“Is it any wonder that once resilient individuals simply find themselves unable to cope?”
FOFA, royal commission reforms due for review: KPMG
KPMG wealth and insurance lead Tim Thomas told ifa that Australia could learn from what happened with the regulation landscape for UK advisers, where analysts in 2018 said the push towards a non-aligned advice model following the retail distribution review led to an advice gap.
According to a Morgan Stanley research note, the region’s larger financial institutions (Barclays, HSBC, Lloyds and RBS) all exited advice or redirected their offerings to high and ultra-high-net-worth clients, before there was a 20 per cent fall in the number of advisers between 2011 and 2016.
The industry then began to move back to a vertically-integrated model in 2018.
“I think about the UK and I think about when they had their retail distribution review, which was their royal commission moment,” Mr Thomas said.
“And they did a post-implementation review of the major changes in legislative settings around the quality and accessibility and affordability of advice. Still, [it was] very focused on addressing conflict of interest issues, but making sure that enough people in the community were able to afford financial advice.
“It does feel to us, that now with COVID being a stark reminder of the financial volatility and the broader volatility in people lives and livelihoods, that some kind of a post-implementation review of FOFA needs to take place, that makes an objective assessment of whether those policy objectives are still being met.”
He added the government should consider how it plays a “role in encouraging the right business models and all segments of the market to encourage greater affordability and accessibility”.
“We saw an advice alleviation very quickly into the COVID crisis. I have to say the take up of that has not been that great, but it shows the sentiment’s moving post-royal commission to ‘let’s try and think of getting advice out there which is cheaper’,” Mr Thomas said.
“Because of the amount of community interest in those findings [of the Hayne commission], the regulator potentially [was] encouraged to swing to one end of the pendulum, which is absolutely focused on market conduct and the quality of financial advice. But we do see some self-correction coming out of COVID where the regulator and policy makers are far more sensitive to the need of getting affordable financial advice out to more people.
“I think there is a belief in Canberra that financial advice is an essential service as people’s financial circumstances have been dramatically impacted by COVID and we do see some level of advocacy from the industry along those lines as well.”
Here we go again, will you go and see a doctor who has no formal formal qualification? The answer is no. As a client I expect my financial planner to meet the minimum education qualification and pass the FASEA exam. If you can’t, please leave the industry.
The exam and education requirements are not causing the exodus. It is the insane level of red-tape and compliance uncertainty.
By the way, would you go to the doctor as often if she/he were required to spend hours with you completing forms and questionnaires, completing ID checks and then wait a week or two for the doctor to go away and write a 60 page report which is mostly designed to meet their own internal compliance requirements, and then pay a bill for a few thousand dollars? I doubt it. Yet that is exactly what we are required to do, and consumers are willing to go through it because they value what we offer. So please don’t insult us by comparing our profession to others which are subsidised by the government, have government imposed restrictions on supply and are not required to put up with the insane levels of red tape we have to endure.
If the politicians didn’t, couldn’t or wouldn’t learn from the UK experience BEFORE all this crap started, why would they now?
the politicians and regulators don’t give a stuff about advisers as long as their pockets continue to be lined regularly.
Australia, the land of red tape
Well done UFAA for putting this on the agenda. But I fear this is all too late. The only way to turn the ship around at this late stage would be a defibrillator-like-shock to resuscitate financial advice in this country. Something that sends a strong message to financial advisers that the future will be brighter if they stay in the industry. Such as the minister stepping in to force FASEA to rework the standards after consulting with a panel of practicing, experienced advisers or a requirement that ASIC end the lookback fiasco, provide an amnesty and once and for all, provide proper guidance to licensees so they know what the hell they need to do in advance, rather than surprising them with extreme, draconian interpretations of the law, applied retrospectively. Unless something of this magnitude is forthcoming in the next 6-8 months, the exodus will be permanent. Tens of thousands of jobs will be lost forever, billions of dollars of annual tax revenue will be gone and consumers will never again be able to access affordable financial advice, except from product providers who use financial planners as a sales/retention tool.
Here’s an idea: Ask consumers what they do and don’t want from their adviser/advice-experience. Almost none will have SoAs, FDSes, Opt-Ins or even RoAs on their “Do” list. How can a government claim to regulate in order to protect and ensure the quality of advice the public are receiving when they have no idea what the public want?
Yes, it is totally disingenuous and misleading to say that clients want higher standards from their adviser without asking them if they are prepared to pay significantly more and wait longer for it.
[b]MORE BS REGS, MORE BS REGS, MORE BS REGS, MORE BS REGS, MORE BS REGS, MORE BS REGS, [/b][b][/b]
The Government and bureaucrats only ever have 1 single answer = MORE BS REGS !!!!!
Thus more costs, more wasted time and a complete and utter cluster f##k, FOR BOTH Advisers and clients.
STRANGULATION BY BS REGUALATION to continue = RIP FINANCIAL ADVISERS
With pollies like Hume so out of her depth of being able to help the industry all she can do is LAUGH at having 9 different regulators.
Disgraceful ETHICS by Hume.
Pollies should be forced to do FARSEA Ethics course, to act with values of honestly, diligence, fairness and provide overall cost, time and resource efficiencies to their decisions.
And be answerable to an Ethics / ICAC body.
Rather than more red tape at every turn and back hand deals with institutions.
UFAA an industry body? Two men and a cocker spaniel don’t make an industry association.
Easy to throw stones. What have you done apart from being an empty barrel making noise
Yet they are still more useful than the FPA
I’d put greater trust in any body where their members make a conscious decision to join, as opposed to puppets like the FPA that made a deal with the big banks. You know the CBA advice scandal deal. Where in return for compulsory membership, one list of advisers names, a large cheque, the CBA got a get out of jail card and you got FASEA. Or consider Stateplus, again a list of advisers name, paid in bulk, who then tells the FPA “don’t worrry about our fee for no service focus on making call centre advice easier and delivering “accessible advice”” Give these guys a chance, you don’t have to like them, but at least they’re not conflicted.
I’ll take 2 men and a dog if they actually stand up for the industry, which they appear to be doing. Unlike the utterly useless FPA and AFA who are complicit in this disaster through inaction.
At least they are trying to help us. More than I can say for the fpa afa and people like you who seem to make noise and do nothing. Looking foolish to us all. Good on you UFAA and AIOFP
Anyone would be better than the FPA or AFA.
A valiant effort be Alex Vagliviello in the absence of anything of substance from FPA or AFA who have moved to the ISF side of the field. I doubt anything will come of it though as most politicians dont believe advice adds any value and leave it to the left wing activist, PC regulators to mop up the remaining advisers. The point of the regulatory minefield is obviously to cull the adviser numbers through breach and fatigue. I’ll keep going as long as I can but at some stage I will sell for what I can and retire. I’m young enough to do something different with less headaches.
Yes, I have learned what anti depressants are….
well i left too. must be greener pastures elsewhere….
Victoria is possibly the worst state in Australia we as licensee and advisors have had to close our offices down work from home which is impossible if you have kids running around the place so if you work outside Victoria you won’t know what it is like being controlled by the worst premier we have ever had planners and advisors are struggling even to pay there ongoing bills so good luck to all the people in our wonderful industry the best is yet to come
yep, Daniel Andrews must be being controlled by the CCP – chinese funding for roads and more – Jeff Kennett came out swinging….this 12 month extension of the legislation is crackers….we don’t need it. ..we don’t need the state locked down….any more than it has been. ..
The current state of health of the financial advice industry and the state of the mental health and well being of exhausted advisers is at breaking point.
The pendulum has swung so far the original purpose has been entirely compromised.
Whilst the world is experiencing a pandemic, this industry is experiencing it’s very own pandemic whereby the spread and destruction is not being contained but exacerbated by constant and relentless factors feeding the problem.
At some point surely those in power must concur that the direction things are heading in is not benefiting either the consumer or the industry.
It takes courage and honesty to admit when a decision has been wrong.
It is now time to re-consider past decisions and look toward a workable solution before it’s too late.
At some point those in power will have disappeared into the sunset (many of the architects already have) sipping on their cocktails while sucking out a publicly funded pension for life. Where is the Best Interest Duty owed to the Australian People???
They’d better get cracking on this. Perhaps already too late. Quality people leaving in droves.
I think it is too late. I predict the number of “compliant” advisers to fall to 10,000 by the end of 2021.