The coronavirus pandemic has exposed the fallacy of aggressive regulation imposed on the advice sector in recent years as a shrinking pool of advisers struggle to service consumers in desperate need, an investment manager has said.
Property Funds Management chief executive Barry Daniels said the crisis was driving advisers to the brink of burnout given the effect on their work-life balance and mental health.
“Planners who normally work long days have been asked to double their efforts working even longer days and through weekends in order to deal with the increased volume of calls and enquiries,” Mr Daniels said.
“The coronavirus has been the ‘black swan’ event that has revealed the gaps and monumental shortcomings of the current financial services system.
“At a time when professional financial advice has never been more important or needed by so many Australian consumers in desperate need, it is unaffordable and worse, there simply aren’t enough practitioners.”
Mr Daniels said the liquidity crisis currently being faced by the super sector also had part of its roots in the over-regulation of advice, with too few consumers having access to a financial planner to advise them on the long-term consequences of early super release.
“Another ‘black swan’ is the concern about liquidity and ability of super funds to handle in excess of 700,000 applications for earlier release,” he said.
“Had there been more planners, they could have provided much needed advice and support that would have been of immeasurable value to both the members and super funds.”
Mr Daniels said the crisis should give regulators the opportunity to reflect on the red tape currently hampering the advice industry and actions that could be taken to prevent a further adviser exodus.
“While time is still on our side, I call on the federal government to undertake a review of financial services looking through the lens of a perfectly imperfect world,” he said.
“To back test the real impact of reform that has failed so appallingly when it was needed most, in the context of ensuring a strong, viable financial services industry and affordable advice is available to all Australians.
“Finally, to take steps immediately to limit the risk of losing more professional planners from the ranks of an industry that needs them so desperately at this time of need and in the future.”
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