2021 has been another eventful year for the advice industry. As well as dealing with the prolonged impacts of the COVID-19 pandemic, the sector was handed a number of new regulation changes in October.
The industry is set for a further shake-up again in 2022 as ASIC becomes the single disciplinary body for financial advisers from 1 January.
We sat down with some key industry figures and advisers to look into the crystal ball and share their predictions and hopes for 2022.
Eugene Ardino, CEO, Lifespan Financial Planning
As we approach 2022, I believe that there is some light at the end of the tunnel, with government, ASIC, and industry finally agreeing in unison that financial advice has become unaffordable.
This in itself is a major milestone as it is the first time that they all seem to have agreed that the compliance framework has resulted in advice being out of reach to the majority of Australians.
But where to from here? We have only really just scratched the surface. Let’s hope that it is not simply lip-service, and that meaningful steps are taken to address the key issues around advice affordability in the coming years. FOFA, and the royal commission were supposed to consider this issue, but sadly those processes clearly neglected to do so that is part of the reason we find ourselves where we are today. Let’s hope that we are now on the right path to addressing the overwhelming burden of compliance.
This year has seen the advice community take more steps towards supporting and being there for each other, and the continued mental health challenges faced by advisers have been openly acknowledged, and we have all pulled together with a greater sense of unity and connection.
In the words of 90s pop band Dream, “Things can only get better”!
Helen Baker, founder, On Your Own Two Feet
My hope is that those in power implement ideas that enable women to seek advice that leads to financial security, whilst also keeping advisers in the industry.
I often hear “I wish I met you 10 years ago”, or “I wish I read your book when I was younger”. With the increasing demands on advisers and the increasing costs of licenses, PI cover, extra support required in the back office, increased CPD loads, constant legislation change, this has led to increased cost of advice and many advisers quitting with more to come.
Women are already behind the eight ball:
These women need advice, and they need it earlier.
With the cost burden on advisers, many women will no longer be able to afford advice, and/or the advisers are turning them away.
For advisers, managing stress and financial stress is necessary to provide the advice. I can’t think of another industry that doesn’t allow you to take a year off, to totally switch off. The constant demands for CPD/licence exams every quarter/exams for every change in legislation mean you can’t catch your breath.
If we don’t find ways to dial down demand on advisers, we will see more leave the industry. More leaving the industry exacerbates further the problems above. I know that quality advice changes outcomes for the better. I also know, that advisers love to help people get on and stay on their own two feet. Right now, this isn’t working.
Brett Schatto, Pride Advice
My biggest hope is for advisers to walk their talk. When this truly happens the regulatory spotlight on us will either dim, or it will feel this way because we actively do things the right way from the start.Advisers, whether business owners or employees need to understand the dynamics of being part of a successful team with robust systems that stand up to stress testing and scrutiny. We need to constantly examine what we do (and those around us) to lift the bar. We need to improve our team cultures to encourage finding issues and learning from those mistakes to make things better, not hide from them. We need to be nimble in our thinking, rise up to challenges, embrace change and respect each other.As Socrates famously said, “The unexamined life is not worth living”. As a professional, this means we should think beyond our own instinct and desire in order to make ethical choices for the benefit of our clients. These choices we must be willing to debate with others and defend under public scrutiny.I want advisers to be proud of their craft and take pride in the quality of their advice. The measure of this will be when outsiders currently sitting in the spectator seats watching the action on the field want to join our ranks, excited about what they see. Young people will go to university because they want to be a financial planner. It is their desired destination, a career choice.
I want financial advice to be seen as important and valued by family members as their local doctor. We can be proud to say what we do at a BBQ catch-up with strangers (COVID permitting).
Karen Eley, Women Talking Finance
Improve the accessibility and the cost of advice for Australians – the only pathway for this is legislation reform and the regulators to adapt and evolve with the current financial system rather than being an obstacle to it.
Having meaningful advice definitions that separate product from advice and simplify an adviser’s requirements to provide strategic or limited advice to clients without undermining the quality of advice and principles of integrity and quality we naturally seek to deliver. More clarity and flexibility around the ability to offer different but meaningful services that suit the client’s needs, i.e. – factual information, general advice, scaled advice to comprehensive advice.
Statements of advice, where no product advice is provided, is reduced to a letter of advice, in the same way, accountants are able to.
Several research reports highlight the greatest value of advice to clients is in guiding financial decisions with a disciplined approach, behavioural coaching, and education, attributing an increase of 1-2 per cent return. I’d like to see a practical application of how these vital and valuable services can be delivered in a cost-effective and compliant way.
A reversal of the escalating costs to serve clients.
Government to put financial services reform higher on its policy agenda – the current system is broken and out of date. With such a focus on consumer protection, how about protection for the financial advisers who put themselves and their own families’ financial security and wellbeing on the line, everyday they open their doors to clients?
We’re such a passionate profession, driven to help make our clients’ lives better but are becoming increasingly disempowered by the regulatory compliance burdens and costs. I want to see a focus on advisers’ wellbeing and recognition of the importance of what our industry does for Australian families’ financial security.
How can we expect to draw more people to this industry when the conditions are so harsh?
Daniel Brown, CEO, Coastal Advice Group Pty Ltd
As we continue to navigate this unprecedented era for advice, my hope for 2022 is that we as an industry begin to see the real opportunity before us.
With the industry clean-out now nearing completion, the supply-demand imbalance has shifted and the demand for quality advice has never been greater.
We’re no longer shackled to product, nor do we need to be everything to everyone. Each and every adviser across Australia has the opportunity to play the role where we can be of most value to those we wish to serve. We’re in a position to truly rebuild our standing as a profession.
But only when we begin to own our role as financial guide, someone who is here to help our clients achieve their aspirational identity, will we have clarity around our client value proposition and the confidence to charge what we’re worth.
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
The corporate regulator has reiterated its focus on improving its reportable situations regime.
While the guidance is targeted at superannuation and investment funds, ASIC said it can also help companies to avoid greenwashing or overstating green...
The financial services minister announced the news on Wednesday (10 August).
Get the latest news! Subscribe to the ifa bulletin
Get notifications in real time and stay up to date with content that matters to you.