Assistant Minister for Superannuation, Financial Services and Fintech Jane Hume said bringing down the cost of advice was a key priority for the government in making advice more attainable for consumers as an increasing number of financial planners left the sector.
“The number of people that speak to me about things like 80-page SOAs – that is crazy stuff and there should be an opportunity to do better, particularly on single issue advice,” Ms Hume told an industry webinar.
“I know ASIC has allowed for single-issue advice during COVID, that was a regulatory change that has been well received and the take up has been terrific.
“So many advisers stepped up and looked after clients on that issue at very low cost, which was great, so we need to think about how we leverage that and use it a bit better.”
When pressed on the issue of where supply of advisers would come from in the coming years, Ms Hume said it was “a role for the private sector”.
“The government doesn’t like to shape an industry – it must be demand driven,” she said.
“That said, the change we’ve seen in the industry has been amazingly fluid in a short space of time, that’s why it’s been so disruptive.
“I think we’ll see better quality and oversight of advice, but it’s not perfect yet and I think there are ways we can make the industry more attractive to newcomers and more profitable for those that are already there, but at the same time deliver a better standard of advice, which is what we all expect.”
Ms Hume also flagged fintech as playing a big role in the future of advice, both by cutting down adviser and licensee compliance time and helping to provide low-cost services for clients with simpler advice needs.
“Technology is an important solution to lowering the cost of advice – there’s some great fintech solutions, so how do we get to the stage where you know what comes out of it is compliant, and the auditing is what happens on top of that fintech solution,” she said.
“We’d also like to see fintech solutions that are broadly available, so if someone says ‘I’m retiring with $300,000 and I don’t know where to turn’, they are able to start that ball rolling and see what parts of the process they need help with.”
she has no idea. my last SoA was 25,000 words. Let me put this in context for you Jane. A Ph.D. thesis is 80,000 – 100,000 words.
I have written research papers for my master’s degree (from a sandstone university) which were only 7,000 -10,000 words.
you want me to give a retail client a disclosure document that is 25,000 words so they understand? if this is not total and utter madness I don’t know what it is.
we need to get rid of AFSL’s and have a simpler system built from the consumer’s perspective. clear, concise, effective is not working as the AFSL’s are dictating the SoA’s format and various inclusions within it
“The government doesn’t like to shape an industry” WTF???? this government has certainly F$%ked this industry with its shaping.
It’s just a joke now… Why bother be apart of this nonesense…
How about rather then waiting for fintech companies to do your job you just get stuck in and fix the mess of compliance and regulations in the industry Jane. Here’s your first job… Sort out FASEA.
Was it really a success? Doing the approach authorised by the government breached best interest and most of FASEA’s requirements so wasn’t really worth the $300.
well, it was a success in demonstrating the current system for the sham it is. so if you have a system that doesn’t work for a time-critical situation then when does it work? why have a system where you have to bring in unlicensed tax agents (a lot of whom aren’t even qualified accountants) to give advice?
hands up any adviser whose advice is NOT time critical? exactly my point. the current system is an utter and total failure and needs to be fixed.
There already is a way to provide simple, scaled advice. Regulatory Guide 244 has been in place since 2012. How you provide scaled advice in the current regulatory environment across multiple regulatory agencies who all want their piece of action is beyond Government intellect. Fintech is a potential enabler but not the ultimate solution.
The No 1 way of bringing down financial advice costs is to change the “Opt In” legislation to “Opt Out” for ongoing fees charged by advisers providing personal advice.
Once the client has provided informed consent & has engaged your services, the ongoing dollar fee clearly disclosed in your statement of advice should continue, until a new Statement of Advice is issued.
If the client wishes to “Opt Out” when the annual Fee Disclosure Statement is issued, that arrangement would still more equitable than fund members paying for ongoing “intrafund” advice that they cannot Opt out of, and have never provided informed consent to be charged.
Who actually used one of those FPA templates anyway? I recently read the FPA acknowledged that the issue is not with the shorter template – it’s all the other requirements still apply in order to give advice. Fintech will help but it’s still very fragmented and labourious process to get right. It’s not that it’s impossible to produce a pink unicorn – it just takes longer and costs more. Politicians need to realise that maybe this is ultimately not in the client’s best interest.
I have to correct you. The FPA didn’t say it was the process or requirements to give advice that is driving up costs. They’re still on a different page and are going on about the requirements that go into the SoA. You’re spot on and agree with many commentators that recognize it’s the entire advice process.
“The government doesn’t like to shape an industry” Haha righttttttt. They’ve certainly shaped the Planning Industry.
Jane is right. The cost of advice needs to be reduced.
Actually, she’s wrong….its the cost of COMPLIANCE that needs to be reduced.
ASIC needs to be reduced
no, they need to keep being given taxpayer funds (even increased) so they can keep appealing to higher and higher courts when they lose. I hope they insist and appeal to the high cour their loss on appeal in the wagyu and shiraz case. I can’t wait.
ASIC please appeal and waste more time, can’t wait to read the excoriating judgement from the high court (when ASIC lose again, and they will)
Does Hume think she’s Marie Antoinette? Advisers don’t want gimmicky special situation relief. They want permanent reductions to the crushing burden of excessively complex over regulation.
Hume is a minister in name only. She is actually just a PR bimbo. Please move aside and give the job to someone who can get things done. The fact the superfluous TPB is still involved in financial adviser regulation speaks volumes about just how ineffectual she is.
Govt needs to cut BS Red Tape REGS all over the Advice world.
This rubbish of Fintech solving the most over complicated Adviser world of ever increasing BS Govt REGS is pure fiction. It will not happen Jane.
Stop using this pipe dream of FINTECH to solve the masses of STRANGULATION BY REGULATION !!!!!!
And thus Govt may actually do something about it, like short form SoA’s, single issue advice, etc.