In its What Advisors Want report, Ensombl found that the most important topic for financial advice professionals is what is going to come from the government’s response to the QAR.
“Advisers are presently staring down many challenges. The government’s response to the Quality of Advice review has provided as many questions as answers,” said Ensombl chief executive Clayton Daniel.
“Investment markets continue to splutter. Sustained high inflation is driving the cost of everything – including advice – upwards, while soaring interest rates are putting the brakes on household spending. The challenge to make advice more accessible has never seemed greater.”
The QAR final report, which was handed down by lead reviewer Michelle Levy in December 2022, made 22 recommendations. The government’s response in June accepted in principle 14 of the recommendations, however, there is still a lot left unanswered almost a year after the final report was delivered.
“Of particular interest to advisers were recommendations around the scrapping of SOAs, the replacement of best interests duty with an obligation to give good advice, the retention of life insurance commissions (at 60/20), and the potential entry/re-entry into the advice market of superannuation funds and banks,” the Ensombl report said.
It added: “ASIC, APRA, and the assistant Treasurer have made clear the expectations that superannuation funds do more to facilitate member access to advice in order to comply with their Retirement Income Covenant.”
Importantly, the report found that advisers were also seeking more stability from the QAR and hoped that there would be a sustained period without further reviews.
According to the report, they also want a speedy implementation of changes and a level playing field with superannuation funds in terms of compliance processes and professional development requirements for those providing “advice”.
Looking specifically at statements of advice (SOAs), advisers want industry-standardised templates for whatever documents replacing SOAs, as well as assurances that scrapping SOAs won’t undermine the ability to secure professional indemnity insurance.
Lat week, Minister for Financial Services Stephen Jones once again insisted that the first stream of the QAR draft legislation is close at hand.
“We’ve charted three chunks to work because everyone in the industry is very aware of this is just a pragmatic way of approaching a very large problem,” Mr Jones said.
“The first chunk of work, we hope to be out with some draft [legislation] in the very, very, very near future so that people will be able to consult on the technical detail of what we’ve decided from a policy point of view to do.”
Outside of QAR-related concerns, advisers were also interested in technology, investments, and life insurance, with pricing of advice rounding out the top five.
Within the broader technology umbrella, Ensombl said advisers were interested in everything from customer relationship management software, platforms, and client engagement software, through to artificial intelligence (AI).
“The most common request from advisers is for platform guidance and opinion in relation to the construction of tech stacks, and around the merits of specific providers,” the report said.
“Common adviser pain points include the quality of reporting, costs, integration challenges and poor user experience (UX).”
According to the report, 75 per cent of advisers said that investments are a four or five out of five in terms of importance to their clients, while half said they “fine-tune their investment strategy” every quarter at least.
“Whilst general portfolio construction conversations remain perennial, the volatility and underperformance of many asset classes seen during 2022 have continued, spurring dialogues about how to adjust strategies in these inflationary times,” the report said.
“Topics that have seen elevated levels of engagement include portfolio construction in high inflation regimes – with an emphasis on alternatives, commodities, and infrastructure – and the relative merits of different investment philosophies and their performance under differing market conditions.”
Ho-hum. We’ve moved on. We’ve already assumed there will be layers upon layers of mind-numbing BS compliance hurdles designed to punish us advisers.
I wish lawyers and accountants were treated with the same contempt… see how long that would last!
The delays are making it difficult for Fintechs to provide advisers with the tools they need for affordable advise. However my company is proceeding and will modify as the government clarifies the situation for affordable advice for everyday Australians
Advisers don’t need yet another piece of expensive technology to provide affordable advice. All they need is removal of the multiple layers of inefficient, ineffective, bureaucratic, counterproductive, regulation that makes advice so unaffordable in the first place.
When I wrote my submission for the QAR review, I discussed the Industry Funding Levy on financial advisers that was the primary cause of advisor industry numbers dropping from around 28,000 in 2018 to less than 16,000 in 2023. ASIC investigation and enforcement costs increased from $23 million to $55 million in 2022-23 to be levied to financial advisors. For my 2 AFSLs, we are expecting ASIC levy Invoices for $51,255. Senator Bragg (Chair of Senate Economics References Committee Hearing on 4 October) asked, “What benefit do we get from the levy?” I replied, “Nothing”. When the ASIC $55 million Invoices in levies be issued soon, how many advisers will depart the industry and how many will remain to implement QAR? Why do research organisations look at each matter in isolation, when both are dynamically directly bonded affecting industry effectiveness and efficiency?
In the Senate Hearing, in reply to another Senator’s question, my reply was: “I apologise for using Australian slang, it is in my submission: ‘If your Police car runs over a dog, why should we have to pay for the dog?'” I apologise to dogs because they did not cause the political levy impost.
More will leave in 2024 because coslr will be included and already over 100 more left meaning less reps to share the burden. Meanwhile asic keeps all of the litigation proceeds will culling the funder of the levy and penalising ones who remain. Then to at least have some less choking tape the got dies nothing. Disgusted and internationally a joke compared to other developed countries. Pigs in a trough our remidation regulator and compliance economy. Parasites
The word “levy” has 4 letters but the real word should contain just 3 letters…TAX!
Because that’s what it is, a tax on advisers that supposedly goes into helping to fund ASIC.
There is clearly no direct benefit to advisers.
But where else do taxpayers pay “levies” to help fund other government bodies?
Councils can impose levies but there is usually a service or benefit provided.