Regulation inflates cost of advice, ASIC told
With the cost of advice out of reach for some Australians, Tria Investment Partners says ASIC must review the tight regulatory requirements which are inflating that cost.
Speaking at an adviser strategy breakfast in Sydney yesterday, Tria Partners' Oliver Hesketh said one of the ways financial advice can become more affordable for Australians is through the corporate regulator reducing the regulatory burdens placed on advisers.
"We think the regulator needs to take a bit of a hard look at themselves," Mr Hesketh said.
"Regulation is a big part of the reason why advice is expensive. Not everyone can afford the ideal advice that we offer.
"So we [are asking] if there is a regulatory framework that will allow for a different and more affordable advice model," he said.
The whole industry, with the help of ASIC, needs to understand whether people are getting the right advice, if the right people are getting advice and at the right cost, Mr Hesketh added.
One way in which the industry should be looking to make advice more affordable is through a "regime" that allows people to more effectively shift from accumulation phase and into the pension phase.
"The problem is, the current regulatory settings are so tight that we aren't offering solutions. For someone without advice, it is too risky [to make the transition], and advice, on the other hand is too expensive [for people to get help]," Mr Hesketh said.
"A lot of people take their money out of the system at retirement, and a lot of them have a reason to do that – such as paying down debt," he said.
"But we suspect that a lot of them take the money out of retirement because it's too complex to keep it in.
"The result is that people are left with a worse outcome – leaving the system entirely and then being unable to make the full use of their retirement savings," Mr Hesketh said.
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