Speaking on an upcoming episode of Relative Return with host James Mitchell, Magellan Financial Group chief executive David George acknowledged that there are a number of trends making it harder for people to access advice.
“Where we connect with a lot of our clients is through their financial advisers, and so it’s important for us that that functions well … I would say that there’s obviously a number of trends [making] it harder,” Mr George said.
“Perhaps there are less advisers, and it’s becoming a little bit more expensive. Perhaps there’s a shortage of advisers ultimately to provide advice in a way that’s as accessible, available, and affordable as I think everyone wants it to be. I think that includes people in the government that are trying to develop policy to create that situation.”
He added that while he believes the majority of the industry is aligned with that vision, Australia’s $3.4 trillion superannuation sector will play an important role in increasing accessibility.
“There’s probably a role to play for technology and more involvement for superannuation funds,” Mr George said.
“Those are good things in that more people can get advice, whether that’s through their super funds or whether that’s digitally, but I think there’s something in the middle where you’ll see technology, and you’ll see hybrid models where that’s either making adviser groups more efficient or increasing their capacity and letting them scale a bit more in terms of supporting more clients. I suspect that will be a real part of the solution.”
However, the CEO stressed that financial advisers know what is best for their clients and that integrating these factors in ways that support advisers is key.
“I probably would stop short of being able to comment on some of the enablers that are likely to be needed to create that environment, making sure that that all works, and advisers can feel like they’ve ticked all the necessary boxes in order to deliver the right advice in a way that makes sense for their clients without being overdone or overworked. I think that is going to be a critical piece,” Mr Geoge concluded.
Among the recommendations in the Quality of Advice Review (QAR) final report, QAR reviewer Michelle Levy said vertical integration is a “part of the answer” to the problem her review was trying to solve — the problem of too few Australians having access to financial advice.
“Financial information, guidance, and advice should be available throughout our lives, and it should respond to our needs and even anticipate them,” Ms Levy said.
“In my view, this means there should be a variety of providers. Not all advice can be provided by financial advisers, and nor should it be. The 16,000 financial advisers are required to hold relevant degrees and to comply with professional standards. They are entitled to charge a fair fee for their advice.”
Ms Levy’s recommendation is for vertically integrated product and personal advice providers to be bound by a duty to provide “good advice”.
Speaking at the Financial Advice Association Australia (FAAA) Roadshow in Sydney last week, the lead ombudsman for investments and advice at the Australian Financial Complaints Authority (AFCA), Shail Singh, said that while AFCA stays out of policy decisions, he would expect an increase in disputes if non-relevant providers can provide personal advice under the good advice duty.
“Some people will not see an adviser, and this is a way they can get advice. So, I get that, and that’s a positive,” Mr Singh said.
“I think it will probably increase the number of potential disputes, because the definition of personal advice is broader. Then it will be a question of interpreting what good advice means by a non-relevant provider.
“I think there are risks in leaving it to industry to determine whether a non-relevant provider or a relevant provider should provide the advice because … there [are] things that look on their surface, quite simple, that can have very severe consequences for consumers.”
“Some people will not see an adviser” = we (advisers) allowed our reputations to be tarnished to the point where the regulators reached for the sledgehammer offered by Mr Hayne.