Helen Baker, founder of the On Your Own Two Feet service and author of new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women, told ifa that she can’t recall any industry that experiences as much constant and significant changes as the advice industry.
“The latest regulations were for the purpose of professionalism, to assure consumer confidence, but we have to be careful not to over-regulate,” Ms Baker said.
“Over-regulation is putting an enormous amount of pressure on advisers’ mental health issues, the single adviser operation is being forced to merge, and many are leaving the industry due to the financial pressures, study pressures and increased CPD demands.
“The increased regulation means advisers have less time in front of clients, plus increased costs to the practice including the need for more back-office support.”
Ms Baker’s comments about advisers leaving the industry come after it was revealed in September that the total number of advisers in Australia has dropped below 19,000.
Ms Baker added that affordability of advice is also a key area of concern for the women she advises through On Your Own Two Feet and that it is vital that all Australians can access financial advice.
During a Q&A at the 2021 Adviser Innovation Summit on Tuesday (9 November), Audere founder Stewart Bell was asked if he believes ASIC should wear some responsibility in the fact that only 15 per cent of Australians seek financial advice, to which he responded by saying a combination of legislation and bad advice has hindered the sector.
“In truth, we went through a period where some of the issues, though magnified, were to do with the way advice wasn’t being provided right,” Mr Bell said.
“You could argue whether the legislation that’s been put through has necessarily changed things. I personally think there’s a lot of stuff in there which doesn’t necessarily fulfill a purpose.”
ASIC will now gear up for its new responsibilities of the recently passed Better Advice Bill that will see the financial services and credit panel within ASIC become the single disciplinary body for advisers from 1 January 2022.
The legislation will also see the removal of the Tax Practitioners Board (TPB) as an advice regulator and that FASEA be wound up, with its responsibilities to be given to Treasury and ASIC.
Dealer groups need to take a fair amount of blame. They take ASIC regulation, double it, add additional self fulfilling risk averse regulations of their own, and sell it to advisers as a service. Most of the remaining larger dealer groups have forgotten their customers are the adviser, not the other way around.
Actually no. The customers of dealer groups are the consumers who buy their inhouse products. Advisers licensed by those dealer groups are the salesforce for those products. Advisers who don’t sell enough product, or who start getting high and mighty about “service levels” or “independence”, shouldn’t be surprised when the relationship turns sour. If you don’t want to be a sales rep for dealer group products, get your own licence.
How ignorant!!! The vast majority of Licencees do not have any interest in financial products. Yet, at the same time, still have unworkable “business rules” to cover their own liabilities and to obtain PI cover.
The current AFSL regime undermines the consumers it is supposed to protect.
Most small licensees don’t have financial products, but dealer groups do. Dealer groups are a subset of licensees. They have lots of “authorised representatives”, lots of corporate overheads, and are reliant on inhouse product sales for their profitability. Even if they don’t use widely available products like AMP, most dealer groups have other inhouse products like managed accounts, SMSF admin services, and white labelled platforms.
Dealer groups hate being called dealer groups because they are trying to pretend their business models have moved on. Sure they use different products now, like managed accounts, but the principles are still exactly the same as the old AMP/MLC/NM models.
Many of us have moved from financial advice into compliance, auditing, remediation for precisely this reason. We want to remain employable and that is where the work is.
I’d like to consider returning to financial advice because I believe in its value to clients. But that is highly unlikely under the current regulatory settings, which have seen a 50% increase in minimum fees in last 4-5 years due to cost of covering compliance.
Most of the increase in compliance roles in recent years has been due to PR driven “remediation” programs by the big institutions. This will dry up soon though, and there will be significant job losses in that field. Anyone who participated in that shameful exercise, which forced many advisers to make refunds for services that were actually provided, is unlikely to be well received as a candidate for employment in an advice practice.
If you want to remain employable, best start retraining for another career.
While I agree with the sentiment I don’t agree with description. Financial advice is not suffering from [i]over regulation[/i]. It is suffering from [b]bad regulation[/b][i][/i].
[i]Over regulation[/i] carries the implication that the balance has swung too far towards consumer protection, and any easing of it will be worse for consumers. But that is not the case in financial advice. While some of the regulation introduced in recent years does provide better consumer protection and should remain, most of it just adds cost and complexity for the consumer without any additional protection whatsoever. It forces consumers away from professional advice, towards far worse alternatives.
Arguably, there should actually be [i]more regulation[/i] in some areas to better protect consumers. Banning vertical integration would be a great example. But instead we have this mish mash of [b]bad regulation[/b][i][/i] that is doing way more harm than good.
Can I please exhort everyone in financial services to stop using the phrase [i]over regulation[/i] as that will be too easily misinterpreted as lobbying for less consumer protection. Call it what it really is… [b]bad regulation[/b][i][/i].
How about – Tripplicated Regulations.
Doing the same thing multiple times like the latest crap of DDO & TMD that are well covered at least twice already in every way shape and form for Advisers via Best Interest Duty and FARSEA.
You can call it Bad Regulation but it is also Over Regulation.
Regulation, over Regulation, over Regulation, over Regulation, layer upon layer upon layer.
Moronic Canberra Bubble madness.