Following a survey of 200 Australian financial advisers, the BT Adviser Sentiment Index found that legislative, compliance, and regulatory change are the top challenges for advisers operating across Australia, nominated by nine in 10 advisers.
Among the surveyed advisers, 38 per cent identified legislative, compliance, or regulatory changes as a “major challenge”, compared with 29 per cent last year, while over half of all advisers consider the changes a “challenge”.
“The uncertainty around the Quality of Advice Review (QAR) is clearly worrying financial advisers,” says Jason Brown, head of distribution at BT.
“As the federal government navigates the legislation, it should provide greater clarity for advisers. We are confident that the goal of making financial advice more accessible and affordable is within reach. The QAR holds significant potential to benefit advisers and clients.”
While the first tranche of legislation coming out of the QAR has now passed Parliament, for the advisers surveyed, some uncertainty remains.
“The impact is intended to be positive, but many advisers still have questions regarding its implementation, with some debate about the introduction of a new class of financial adviser,” said Bryan Ashenden, head of financial literacy and advocacy at BT.
Financial Services Minister Stephen Jones signalled last week that the second tranche of reforms would continue to be developed over the second half of the year, including the proposed new class of adviser.
“Advisers have noted this and are considering the implications for their clients if super funds begin providing advice,” Ashenden said.
“Advisers are concerned about the potential impact this change will have on their existing client relationships and the introduction of an additional levy. While the QAR aims to simplify and reduce costs, some advisers reported in the survey feeling that the changes may have had the opposite effect.”
According to the report, just a quarter (25 per cent) of advisers surveyed believe the QAR reforms will make advice more accessible to consumers, with 37 per cent remaining neutral and another 37 per cent thinking the reforms will make it harder for consumers to access advice.
Additionally, 30 per cent of advisers disagree that the QAR reforms will benefit their business or advice model, with just 26 per cent agreeing, and another 44 per cent as neutral.
Ashenden also pointed to the increasing cost of levies hitting the advice profession, including both the Compensation Scheme of Last Resort (CSLR) and ASIC levy, which combined, will hit advisers for more than $4,000.
“The issue many advisers are struggling with is that a levy on advisers will fund the pool of money for payouts,” Ashenden said.
“This levy is particularly contentious. Advisers agree that people should have the right to be compensated where they have received poor advice, but they are concerned about why they should have to pay for someone else’s poor advice.”
Bruce Gorry, managing director and principal adviser at Provident Advisory, added that the CSLR is the “biggest issue in the advice profession at present”.
“[The] impact this has on advice practices around the country cannot be overlooked if Canberra is genuine about making advice more accessible and more affordable for everyday Australians. The crux of the matter is that this well-intentioned legislation will generate the opposite effect of the intent behind the Quality Advice Review,” Gorry said.
