The financial services royal commission took a significant toll on advisers, leading to somewhere in the range of half leaving the profession entirely.
It also drastically reshaped the face of the financial advice profession, removing product providers from advice and making vertical integration a thing of the past.
Those working in the financial advice sector understand how much things have changed in just five or so years, as do their clients, but the response to the latest details on the new class of advisers (NCA) has shown that the broader public – those these measures are in theory being designed to help – are stuck with an outdated perception of advice.
Check the comment section of the mainstream media articles on Financial Services Minister Stephen Jones’ announcement last week and you would think it was 2019.
Commenters are railing against financial advice – and not just what they expect to come from a super fund NCA. Apparently financial advisers are untrustworthy, biased and driven by commissions.
The hard work done to remove conflicted remuneration was, it seems, a figment of our collective imaginations.
Others have argued that advisers are less trustworthy than used car salesmen, real estate agents and even politicians.
A few complained about the cost of advice, which based on every piece of research over recent years, is a persistent complaint until people actually get advice.
However, some don’t understand why anyone would even need financial advice – just do a bit of research and sort it yourself!
While the readership of ifa would understand that the criticisms of financial advice don’t make a lot of sense, it highlights part of the problem advisers are facing – perception.
Public perception rarely cares about facts and takes a lot to turn around.
The royal commission was massive news and got a lot of attention among mainstream audiences. The response did not.
In the minds of far too many Australians – Australians that could seriously do with financial advice – the lasting impression they have is the problems that were highlighted.
They never even heard about the changes.
When the only thing many in the broader public are hearing about advice comes from announcements of legislative changes, it’s not surprising that their opinion on the whole profession is filtered through this lens.
The NCA announcement could be positive or negative depending on how it plays out – the profession may end up with more fully qualified advisers down the track if they get the education side right – but in the eyes of the public, they are now seeing advice as collectively charged through an industry super fund.
The perspective that this is essentially super fund socialism might be a bit far, the prevalent view that paying for advice you aren’t receiving is unfair is a sticking point for many.
Whether intended or not, that’s the view of advice many Australians are stuck with. Breaking this perception is just another in a raft of challenges facing financial advisers.
Someone needs to hold Mr Hayne’s feet to the fire he started.
Just wondering if Kenneth Hayne is going to pay back his RC fee? Seems most of his recommendations weren’t worth a cracker.
Chris Bowen stated to the media just prior to the release of Hayne’s recommendation that Labor would implement the whole lot and every single recommendation….even when he hadn’t yet seen them!!!
100% political approval sight unseen.!
Fish in a barrel? FPA (Now FAAA) still doing the same same?
We need to get away from this idea that people are entitled to low cost financial advice.
This is not a charity service.
People would like low cost dental care. Do they get it? Are dentists crying about how sad it is that people can’t afford treatment. No way.
We have now returned to the position prior to the Royal Commission. Only this time the field has been cleared of small advisors and the playing field titled firmly in favour of the industry funds.
This was obvious years ago. Unfortunately the clowns in the FAAA and the majority of advisors were too stupid and meek to see this.
Thank goodness I only have a few years to go in this business. I would recommend any young person emabrk on a career in financial advice. be a lawyer, accountant or join the public service. Far more rewarding and a lot less onerous
As a newcomer to ‘profession’, previously working in another profession, I have to say the many advice media sources are highly sensationalist in their reporting.
Your basic argument is ‘the town square made some noise recently on another media article and this therefore is how the profession is seen’.
It’s lazy reporting frankly and in conflict with more reputable data that exists already that suggests that trust in financial advisers is growing.
The biggest threat to any progress in financial advisers advocacy is the industry itself and in particular it’s fragmented adversarial factions.
The majority of people think commissions still exist on investment advice in my experience. There isn’t any point trying to explain to these people how BID works let alone why you need to provide them with an SOA that is 3 times longer than it should be.
33 years ago I started at MLC, where there were 3 different levels of ‘proper authority’ in deciding which products you were authorised to sell. Level 1 was in-house, MLC only products – predominantly insurances (Whole of Life & Term) and Employer super products. Level 2 gave you access to some in-house Single Premium investment products and personal super products; Level 3 gave access to external products.
All products had commissions; some with Entry fees, some Deferred Entry, some Exit, ALL had Trail commissions. It was all ‘hidden’ commissions – no need for disclosure. In fact, only an IDIOT would disclose the real commissions.
Businesses were built on providing service as required, with (essentially) low ongoing trail commissions on investment and super products cross-subsidising services provided to the very few people who needed something in any given year. Typically less than 20% of the clients needed something in any given year, so 100% of clients were ‘pre-paying’ today for services to be received in the future.
Here we are today looking at NCA’s – essentially what old MLC sales managers would recognise as ‘Level 1’ in-house only proper authority holders. The ‘product’ as a whole provides a commission-by-any-other-name income to the ‘advisers’ to provide service to the few that need it in any year, with the rest of the Members pre-paying for when THEY need help in the future.
In the meantime, consumers tell us they shouldn’t be asked to pay for a service they aren’t using, and may not use.
So everything old is new again.
Maybe Haynes can hang around a decade or so and get a whole new passel of Contracts to hold another Royal Commission telling us that members shouldn’t be charged collectively for something they are not using.
It’s not Adviser’s job or challenge to fix Australian’s perception of Financial Advice.
Advisers just need to work with clients who value the advice, pay for the advice and deliver a profit to the Adviser’s business.
Adviser’s do not have the time to worry about all the people who either don’t value advice, can’t afford advice or don’t even consider it is necessary.Those people are a waste of Adviser’s valuable time and is business suicide to attempt to work with them at all.
They are not the target market.
Life is short and Adviser’s do not and should not run charitable organisations.
Sure, many Adviser’s choose to do things with their existing clients that either they elect not to charge for occasionally as it’s part of the relationship, but for that large cohort of people who are negative toward advice or simply can’t afford it, this is a major Govt problem to solve.
The problem is that every Govt seems to be incapable of implementing appropriate legislation to rectify this problem.
then why comment at all, Ropeable?
Because I enjoy waiting for people like you to respond.
fair enough – me also!
a determination of a profession is it’s public perception and how Advisers want to be seen. Professionalism leads to less regulation and Government intervention. One day Ropeable will be lying on his death bed and people will be told you were an adviser and i would hate for those people to hang there heads in shame.
“Professionalism leads to less regulation and Government intervention.”
I will believe that when I see it. if in fact your statement is true, then why are NCA starting off with LESS regulation than fully qualified Financial Advisers? Seems more is at play than professionalism?
The issue at the heart of this debate isn’t just public perception; it’s the ongoing sector war between industry super funds and the financial advice profession. This isn’t a new battle—it’s been waged for years, and the financial advice profession has consistently been caught in the crossfire.
Industry super funds have long been the driving force behind the dismantling of key elements of the advice sector. The elimination of commissions—a move marketed under the guise of protecting consumers from “conflicted remuneration”—was spearheaded by industry super through aggressive lobbying and an astroturf national campaign, most notably the infamous “Compare the Pair” advertisements. This campaign painted financial advisers as commission-driven and untrustworthy, eroding public trust and paving the way for regulatory changes that banned trail commissions. The result? A halving of the advice sector and an exodus of experienced advisers, all while industry super retained its hold on funds under management.
What was the Financial Planning Association of Australia (now FAAA) doing during this time? Watching from the sidelines. Despite the clear threat, the association failed to push back against the well-funded, highly organised campaign waged by industry super. Advisers were left vulnerable, with their livelihoods and reputations undermined, all in the name of “consumer protection.”
Fast forward to today, and we’re witnessing a continuation of this war through a lawfare campaign disguised as reform. The introduction of the New Class of Advisers (NCA) is a thinly veiled attempt to further consolidate control over advice within industry super. By restricting NCAs to advising on products from prudentially regulated entities—effectively industry super funds and insurers—the Government is gifting industry super an exclusive channel for delivering “simple advice.” This ensures funds retention while sidelining independent advisers and retail super.
At its core, this war has always been about one thing: retaining funds. Every major push—be it banning commissions, demonising advisers, or now, championing NCAs—has been aimed at preventing funds from leaving industry super. And the collateral damage? The financial advice profession and, ultimately, the Australian public, who lose access to diverse, independent financial guidance.
Public perception isn’t just a passive phenomenon; it’s shaped by the narratives pushed by powerful players. Industry super has mastered this, successfully embedding the idea that financial advisers are inherently conflicted and that advice is something to be handled “in-house.” Until this narrative is actively challenged—by advisers, professional associations, and even the Government—public perception will remain skewed, and the profession will continue to face an uphill battle.
Breaking free from this cycle requires recognising the sector war for what it is: a calculated effort by industry super to dominate financial advice at the expense of consumer choice and professional diversity. Until this is openly discussed, the challenges facing advisers will persist, and public perception will remain a convenient smokescreen for deeper, structural issues.
Well said. Soon, the airwaves will be inundated with industry fund advertisements telling the public – ‘don’t spend thousands of dollars on financial advice every year, come to us where financial advice is free!!’ Any financial adviser with a marginally profitable client base will be out of business very quickly, and will have no choice but to sign up as an NCA/sales agent. The end game is near.
You can not be serious , I recall when customer advice records came in also when advisers were saying you could purchase life insurance from your local butcher Yes seriously.
None of this happened and a good adviser is appreciated by their clients and always will be no matter what industry funds do or say. It is quite simple to show the claims experience with industry funds and No service the client is just a number with industry funds , we have more referrals and work than we can handle and as long as we continue to provide excellent persoanl service to our clients that will continue
Most aussies should leave their money with an industry super fund. What is the problem here?
If this is in fact the case, what is your evidence?
The FAAA have stated they are ” cautiously optimistic ” !!!!!!
What they should be saying is that they are ” as mad as hell, and are not going to take this anymore” !!!
Why are we going back to the future in all the wrong ways ?
This highlights the idiocy of the current rules.
Conflicted Advice.
Fee for no service.
Cross subsidization.
Vertical integration.
Am I missing something ??
Oh – And the FAAA shouldn’t be having a bar of this nonsense.
think of all those new FAAA members with membership fees all paid by Cbus…FAAA is thinking cha ching. They’re the future members and you’re the past it seems.
Remember the deal with a former insurer exec and an exec in a so-called professional body to do a bulk membership deal.CBus would love to have thier NCAs become members of FAAA at a discount for a bit of street cred