Although Financial Services Minister Stephen Jones announced this month that the government will accept 14 out of the 22 recommendations put forth by the Quality of Advice Review (QAR), specific information regarding the implementation of these recommendations is still unknown.
Given the uncertainty, moneyGPS chief executive officer and co-founder George Haramis told ifa that accurately determining the precise extent of any improvement in adviser or practice productivity remains particularly challenging.
“It will ultimately depend on the business model,” Mr Haramis said.
The obvious changes that are set to provide some form of relief include the removal of fee disclosure statements, which Mr Haramis aptly referred to as “low-hanging fruit” that will significantly reduce administrative burdens and save valuable time.
But in terms of Mr Jones’ announcement that safe harbour steps will be scrapped from the best interests duty, Mr Haramis opined that hurdles still remain.
“This is fine, but you still have to meet the best interests duty. You must explain the advice given is in the best interest of the client, so how much time this will save is anyone’s guess, and will also be dependent on the practice proposition,” he said.
Regarding the minister’s response to the QAR’s recommendation to eliminate lengthy statements of advice (SOAs), which he only accepted in principle, Mr Haramis said: “We don’t know the specifics on this one”.
“We will still need some form of document … too early to speculate on the end game here.
“From a moneyGPS perspective, we would encourage the minister to accept all of the recommendations,” Mr Haramis added.
Moreover, he urged the government to evaluate the QAR recommendations holistically rather than adopting a fragmented approach and from a strategic perspective, taking into account their broader implications and potential synergies.
“Yes, the QAR recommendations seemed to be controversial when first released, but after considering their intent as a ‘package’, it is clear they have the ability to simplify a complex advice industry,” Mr Haramis said.
“They go to the heart of creating an environment that will deliver accessibility of advice for everyone, simply, efficiently, and effectively, at the time the client needs advice — meeting the needs of everyone looking for help.”
Lack of detail problematic
After the minister announced the government’s response to the QAR at a private ASFA event earlier this month, Mr Haramis immediately expressed his disappointment with the lack of specific details that were provided.
Speaking at the ifa’s Adviser Innovation Summit he said: “There was a lot of talk, a lot of nice things were said, not a lot of detail.”
Asked to score the response, he said it would have to be a four to five out of 10.
Mr Haramis also felt that the minister’s leniency towards super funds — which are expected to play a larger role in financial advice — indicated a lack of understanding on his part regarding the financial advisory needs of Australians.
“Financial planning covers a broad spectrum of topics and issues. It’s not just about super. Super is a big part of the nest egg, and it’s a really good starting point, but there needs to be a discussion about the broader offering,” he said.
“People need a piece of advice at some point in their lives. They may not necessarily need a comprehensive advice plan, but they do need assistance on specific points at a point in time.”
Moving forward, Mr Haramis underlined the need for less consultation and more productivity.
Mr Haramis is due to meet with Mr Jones next month when the minister is due to sit down with digital advice providers to consult on the QAR and their ability to boost access to advice.
Also earlier this month, the minister met with the Joint Associations Working Group (JAWG) in Canberra to discuss the government’s new roadmap for financial advice reform.
Speaking to ifa following the meeting, Sarah Abood, chief executive officer of the Financial Advice Association Australia (FAAA), described the interaction with the minister as “really positive” and added that a “lot of deep conversation” about the QAR was had.
“The feeling is great. The minister is clearly understanding the concerns that the profession has raised with all of the red tape and bureaucracy and so on, and probably the best news out of that for us is that he really does recognise these are urgent to solve and he is really keen to prioritise them,” Ms Abood said.
“That’s music to our ears, obviously, and we’ll be working with him very closely on getting those quick wins into drafting and across to Parliament as quickly as we possibly can.”
The government is due to deliver its final QAR response by the end of the year.
