Financial Services Minister Stephen Jones’ announcement last week that institutions would be able to employ “qualified advisers” to provide limited advice directly to consumers was met with concern from the advice industry.
The Financial Advice Association Australia (FAAA), for instance, felt the government’s response, particularly regarding the creation of a new class of financial advice providers, “appears to invalidate the hard work and pain that has been involved in creating financial advice as a profession”.
“There is little detail available at this stage, but on the face of it, we are deeply concerned at the direction of these announcements,” FAAA chief executive Sarah Abood said on Thursday.
“Our members fear this could be winding the clock back five years on our profession.”
On the other side, the Council of Australian Life Insurers (CALI) came out strongly in support of the government’s Delivering Better Financial Outcomes package.
“These changes will ensure Australians have more choice and better access to affordable advice when they need it most, so they can make informed decisions about how to protect their future,” said CALI CEO Christine Cupitt.
“Through qualified advisers, life insurers will be able to provide simple advice directly to their customers to give Australians peace of mind as they make some of life’s biggest decisions.”
She added that with these “qualified advisers” able to advise on less complex matters, it would complement the work of professional financial advisers.
“Australians will no longer have to wait in line to pay $3,500 on average for financial advice. For many people, getting advice has been far too expensive and inaccessible with just 1,000 financial advisers nationwide who help people navigate life insurance products,” Ms Cupitt said.
“Cost of living pressures are already putting Australians under financial stress, and getting advice on how to best protect and secure the future for themselves and their loved ones shouldn’t be another hurdle they face.”
She did, however, stress that life insurers would only be able to provide this advice with “appropriate limitations and strong consumer protections to ensure better outcomes for Australian workers and their families”.
According to Risk Hub founder Marc Fabris, with a dwindling base of risk advisers, the industry needs solutions to help Australian clients.
“I don’t think advisors generally are against different layers of advice or client support, whether a call centre or general advice or limited advice, etc. But let’s make that a fair and level playing field,” Mr Fabris said.
“Bottom line is, and this is no surprise to anyone, there are way more clients with insurance policies than there are people that can possibly help them. I think everyone is in agreement that there needs to be some solutions,” he added.
“I would say from the adviser’s perspective, they would like to be able to deliver what they do more efficiently with greater reward, so that they’re more able to do so. But the bottom line is, even if all advisers had better processes, there are still insufficient advisers to service in-force clients. So, there needs to be some solutions and I don’t think there’s a push back on that on the whole.”
The lack of clarity on exactly what level of education will be required for “qualified advisers” is something that needs to be communicated, Mr Fabris said.
“At the moment, what is the real difference between a call centre support person and ‘qualified adviser’? Under the terminology, what’s the difference? And that’s what’s not clear to anyone just yet,” he said.
“You’re talking about having someone who is more qualified to provide support. But what is the level of qualification? It’s almost like saying, do you have a section of your call centre that is just more highly qualified? Is that what it is?”
Mr Fabris added that while he believes the principle of providing advice to more Australians “makes sense”, it’s still important to “make it fair for advisers”.
“What a risk adviser is not going to want is for what they provide, the entire value, to be undermined by an alternative system that provides nothing like the level of qualification or consideration of personal circumstance,” he said.
“I think it’s going to be annoying if it’s delivered in an unreasonable way that undermines the quality of holistic advice. So, if it’s managed appropriately, with a fair playing field, I don’t think anyone can really complain. I think there absolutely is a need to have different levels of advice and give clients choice.”
You can see everyone pushing their own agenda in support of what is in their best interests