In a speech in Canberra on Thursday morning, Financial Services Minister Stephen Jones announced the government’s position on the final two stages of reforms coming out of the Quality of Advice Review (QAR).
Among the measures being taken as part of the Delivering Better Financial Outcomes package, the government has sought to expand access to financial advice to as many Australians as it can.
One way it is doing this is through welcoming institutions back into advice, including banks and insurers, not just superannuation funds as had been widely expected.
“This is a pragmatic step that will expand the provision of personal advice to improve consumer outcomes,” Mr Jones said on Thursday.
“Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters.
“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.”
The move has been met with consternation among those in the advice profession, with Financial Advice Association Australia (FAAA) chief executive Sarah Abood taking particular aim at the new class of “qualified advisers”.
“There is no detail on the qualifications that would be required, however, they would be substantially less than what is currently required to provide financial advice. Thus, the proposed term is self-contradictory and extremely likely to confuse consumers,” Ms Abood said.
However, another measure aimed at increasing affordability and accessibility of advice is through digital advice technology, which the minister said would help meet the scale of advice required.
“The benefit of digital advice is that it enables the client to receive helpful advice at a time and place that suits the client. In the superannuation context, I envisage that funds will look at embedding these digital tools into their advice services,” Mr Jones said.
“This could enable a member to assess where they are and where they want to be. And then develop a contribution, investment and drawdown strategy that delivers them the income they want in retirement.
“However, many consumers still want human support through this process. To date, this has limited the potential of digital advice, given this would require a professional adviser to provide this support.”
According to Jacqui Henderson, founder and CEO of Advice Intelligence, this part of the measures are “really positive”.
“It’s going to be very technology neutral. But it’s going to help, I think, digital advice providers and enable funds to basically execute a lot of what the legislation is trying to achieve. So, I think it’s really positive,” Ms Henderson told ifa.
George Haramis, CEO of moneyGPS and accountantsGPS, said Thursday’s announcement assures that digital advice is “here to stay and that it has a clear role to play in the delivery of advice to working Australians in some way, shape, or form, depending upon the digital platform that you use”.
“The other thing that I like about is that it recognises that, for some clients, they can’t afford advice, we’ve always known that, and now, there’s a means to access compliant advice through digital means or via a hybrid service, which I think would be the more popular way to go going forward anyway,” Mr Haramis said.
“That’s our experience today that people want to speak to an individual, but they don’t mind going a certain part of the way of the process on their own digitally. And then, at some stage, they have access to an individual if they choose to actually speak to them if they need to.”
Ms Henderson agreed that hybrid advice is beneficial for consumers who are still looking for a human to be involved in the process.
“A human needs another human sometimes to validate their thinking,” she said.
“But still, there will be a lot of people, especially with more people in that accumulation phase, younger generations will want to just engage digitally.”
She added that the proposed changes to the legislation will “open the floodgates for consumers and members to get access to financial advice”.
“There will be more clarity around the legislation and what funds can and cannot do,” Ms Henderson said.
“It enables that innovation, which has been in development for a long time. And it’s what I communicated to the minister’s office, is that this technology exists today. It’s just the legislative framework that exists, has not allowed that to fully flourish through to members so that they can gain access to quality advice in a digital, accessible, and affordable way.
“So, I think this is a really helpful step forward.”
Mr Haramis added that, assuming the announcements come to fruition in 2024, it is a positive for all stakeholders.
“All of the proposals sound good, but it’s early days and there’s no detail. We’ll just have to wait. Probably more consultation in more detail to come out,” he said.
“But I just think it’s a fantastic result for the consumer, for super funds, and look, to be honest, I think it’s a great results for the advice industry, because it gives them options as to how they can engage people who normally would not be able to afford the median advice fee of $4,500.”
