Understanding this, really letting it digest, could allow advisers to change their outlook on the report and what it means for the industry.
As you probably know (unless you were on a digital detox, in which case I envy you) the government published Michelle Levy’s final QAR report in February.
While her insights and recommendations were not exactly surprising, given her frequent speaking engagements, the sheer length of the 267-page report was quite intimidating.
Even Financial Services Minister Stephen Jones appears to have had trouble digesting its contents given it took him almost two months to read it and click publish.
Michelle openly confesses in the report that her goal was not to aid financial advisers, digital advice providers, or any other industry players.
Instead, her central focus was on the consumer and their need for accessible, affordable, and safe financial advice.
This truth is challenging the industry to re-evaluate its priorities and strive towards a system that prioritises the wellbeing of the consumer above all else.
Speaking on a recent ifa podcast, the chief executive officer of the Association of Financial Advisers (AFA) made a similar point.
Discussing Michelle’s detractors, Phil Anderson explained that as the review was designed by the former minister herself, it was always intended to focus on the central issues of access and affordability of advice.
“We have to be conscious that that’s the approach that she took, and we have to, at the same time, work with her to ensure that the solutions deliver better outcomes for financial advisers,” Mr Anderson said.
While he hopes that delivering better outcomes for advisers is a “substantial outcome” of the review, Michelle, he stressed, was commissioned and directed to focus on creating better outcomes for consumers.
And that she did, according to the Joint Associations Working Group (JAWG), which represents a large portion of the country’s advisers.
Praising her for putting the interests of consumers front and centre, the JAWG said the report provides the catalyst for a strong reform agenda.
So perhaps, instead of questioning Michelle’s political affiliations and compensation, the industry should embrace the report as an opportunity for fundamental change.
As the popular saying goes, “don’t let perfect be the enemy of good”.
It’s time for the industry to come together and use the report as a launching pad for meaningful and lasting change.
certainly QAR is not a perfect solution for anyone, i can see a train smash ahead. but hands up all advisers who are willing to cut their advice fees if all the red tape is removed? also hands up everyone who would like to take on as clients people with nothing but $80k in their industry super fund? we all hope digital advice will fill at least part of the gap but that likely wont be a perfect solution either.
There was never any questions that QAR was about reducing the cost to clients.
What we need is action.
Tell us something we didn’t know. The reality is that if the Govt is serious about “helping consumers” they would eliminate Annual Fee Renewal Consent forms (as they do not exist in any other nation on earth, except here). When advisers become more efficient (with this ridiculous red tape) they will have far more time to provide increased service support to the 1 million orphans languishing on the investment platforms, plus consumer costs will fall.
And thus another load of rubbish to the pile of making Advisers life difficult and thus not being able to help Consumers.
Clearly the BEST option is for REAL Advisers to help Advise Consumers.
And any argument against that is pure Rubbish, product flogging hypocrisy.
Sure the 55% of Advisers remaining from 4 years ago can’t help Advise All Consumers.
But for the sanity and safety of all consumers are BEST served by REAL ADVISERS.
So the focus should clearly be on reducing Advisers BS mass over regulation to allow Real Advisers to help more consumers.
The other solutions, most of QAR / Robo Sales are of conflicted sales and are pure product flogging, not Advice.
CONFLICTED, VERTICALLY OWNED PRODUCT FLOGGING is NOT ADVICE.
And that Maja Garaca Djurdjevic is well worth remembering.
The Quantity of Advice Review has always been about how Super funds can flog more products to consumers. We never thought it was about us at all…We thought it would be about consumers and there their need for accessible, affordable, and safe financial advice and so were of course shocked when we Advisers were offered a few crumbs to distract us from the central focus of the report, that being to generate more FUM for Super funds.
If it is about making it affordable, here are a few GOOD ideas:
1. Make Financial Advise a tax deductible expense the way Tax (Accountant’s) advice is.
2. Make Financial Advise a tax deductible expense the way Tax (Accountant’s) advice is.
3. Make Financial Advise a tax deductible expense the way Tax (Accountant’s) advice is.
A question to Michelle Levy, if your goal was not to aid financial advisers, digital advice providers, or any other industry players, but the central focus on the consumer and their need for accessible, affordable, and safe financial advice then 1) Why is AFCA and Consumer bodies at odds to your recommendations? 2) How does giving all the different providers of financial products and ‘good’ and best interest (fiduciary) financial advice, legal terms (designations) like “relevant” and “non-relevant” provider making it easier for consumers to identify and understand they are receiving affordable advice? Keep it simple: conflicted advice versus independent advice, which is easier to define in my personal view.
How many of the JAWG participants really look after advisers? We’ve had FOFA, LIF, FASEA, and the brunt of the Royal Commission under their watch. We need a fresh start with representation for actual advisers
Everybody talks about looking after the consumer. Most with vested interests did not. Only financial planners achieved that distinction because the clients were their asset.
Life is too short for this. Financial advisers today are a tougher breed, and probably more future-ready than most other professionals. Whatever the outcome of QAR, financial advisers will find a way to adapt and make it work, because we always do. I for one no longer care about QAR because I can’t control it. Instead, I choose to focus on building my practice, and delivering solid results for my clients. Everything else is a life-sucking distraction unworthy of your precious energy and enthusiasm.
“Michelle openly confesses in the report that her goal was not to aid financial advisers, digital advice providers, or any other industry players.” What BS – this is all about Industry Superfunds sidestepping the laws governing provision of advice to retail mum and dad clients.
The FPA and AFA do their members a disservice by being in the JAWG with the product providers association (FSC). It seems the FPA just can’t cut ties with product providers and their sponsorship dollars .
Keep being like the turkey voting for Christmas FPA members.
What’ll happen is the Industry Funds will be given a free ride and the screws on advisers will be tightened further. You can bet “the advisers last dollar” that’s what the Labor Party will do.
100%
Better consumer outcomes? With conflicted advice and no best interests duty? No mention of best financial interest of the client or a better position statement.
If Levy’s QAR report was subject to the same compliance standards as the SOA’s Financial Adviser must produce then I think it would get a very low score.
In our SOA’s we need to consider “alternative strategies” and discuss why they were not as good as the recommended strategy. What are the alternative solutions? Why is getting the banks back into advice better than all the other options?
Recommending the banks as the solution in the QAR is kind of like an adviser recommending a client who just left an underperforming super fund rollover back to the same underperforming super fund. Of course a client would be very suspicious of such a recommendation and wonder what conflicts of interest the adviser has (eg does the adviser directly or indirectly receive income from that super fund?).
Is getting the banks back into advice really the best solution available? Surely there are smart people out there that can come up with a better solution for affordable and assessable advice than to try and repeat the same experiment hoping for a different result.
Less than 2 years ago on June 11 2021, “Ongoing fee reforms a positive step: Hume
The financial services minister has said that recently introduced reforms to ongoing fee arrangements (OFAs), which
will cost the industry $28 million, were necessary to stop clients from being “charged invisibly”.” Right – so no more invisible fees then…
Cannot wait until the next round of ads from the Industry Super Funds – “Compare the Pair – Industry Super Funds financial advisers do not charge fees, unlike retail advisers that charge $5,000 upwards – ‘disclosure – past management expense ratios are not an indicator of future management expense ratios’, blah, blah, blah”…
Ouch- too true. Free versus pay a price…..any consumer will go for free!
The FPA can already smell the corporate sponsors coming back.
Haven’t they always been a bunch of lightweight _ucks!
I’m 72 and I joined this “industry” in 1983, no fact find, no SoA’s, commission based selling, over the years I have seen many changes and to be totally honest we have ourselves to blame, we have AFA/FPA, and I don’t know how many other bodies. What do doctors have 1 – AMA. We have to unite as a profession or perish as an industry.
We did not have AFSLs, either, James – disobey them them, if you dare.
Perhaps the best solution is for every super fund to direct the “$9.65 p.a. per member for advice” to ASIC to help funding and not have any inhouse sales reps. Then a fund member who wants advice limited to the fund they are in can contact a real, trained and professional adviser to deliver that advice.
The adviser can then send the signed advice fee form and the notes for the case (and the time taken for the advice) into ASIC and receive a fee from ASIC. ASIC can review and set the fees for the type of advice provided. ie investment selection, contributions, insurance levels, consolidation (This fee can only be paid if a client retains an existing fund) pension establishment, retirement planning. Kind of like a medicare system.. ASIC can then set a per member advice fee to each fund each year to cover the costs. ASIC then has the power to review the advice given in real time and issue guidance on any trends it is concerned with.
Members who want advice about other planning solutions or fund selection advice can pay for it themselves like they do now.
As part of standards 5 & 7 we can be in the best position to determine if a person will benefit from paying additional fees for advice given their circumstance or if some guidance around the fund they have for no additional fee will be a “good” outcome.
So since banks and institutions got into advice we have:
– had a Royal commission which revealed a number of issues but certainly the focus on misdemeanours of banks.
– banks sold out of advice and refunded billions to clients.
– financial advisers were left to foot the ASIC bill to go after the banks for poor advice etc.
– financial advisers leave the industry due to death by a thousand cuts.
– financial advisers had to sit an exam on ethics and also meet minimum education standards.
– people are then surprised that fees go up and advice is harder to provide and for clients to access.
– the solution is to let banks and institutions back in and while we are at it get the night full shift at Coles to come in after work and give advice to people over the phone (no offence to Coles staff) with reduced compliance requirements to proper advisers.
Makes sense.
Does anyone not realise if they focus on making financial advice a viable and respected profession and at the same time make it easier to do our job that maybe we would be able to fill the void left by the banks.
But Financial Adviser tend to roll over FUM from Industry Super – a threat to FUM and all the power that goes with that FUM?
Can someone please give me a ‘please explain’ over what the Royal Commission was about along with the reputational damage we all endured as a result of the findings? I thought that was about consumer outcomes. Oh, and as for ‘don’t let perfect be the enemy of good’, don’t worry, when advice goes back to being given out via a telephone call to a call centre in a vertically integrated, self-interested and wholly conflicted environment, where there is no requirement to provide anything in writing, we certainly won’t need to worry about perfect or good.
Can you imagine the AMA supporting a move to allow pharmaceutical sales reps to give medical advice and sell drugs direct to the public? This is effectively what Levy has recommended for the finance sector and the AFA and FPA are supporting this?
No but you can go to the chemist and get basic information and advice on which over the counter products may be suitable for your situation and ultimately the pharmacy itself is responsible for that advice you receive. This is basically the same as what is being proposed in financial advice.
Currently, the extend the analogy only those who can afford to pay hefty fees to get in to see an insufficient amount of GP’s (who also will only want to deal with clients who can afford expensive treatments) can get advice on even basic matters.
Not everyone needs a doctors appointment for every ailment, sometimes for a one off, non-life threatening issue the chemist can do just fine.
Not quite there champ.
At least the Chemist is not selling only their own drugs. They have a whole range of drugs from all sorts of different drug companies and can provide genuine advice on what they think is in your best interest.
It is entirely different to Drug companies selling only their drugs via online call centres via uneducated and unqualifed call centre jockeys.
And that is what Levy has proposed.
To Anon, – Except the pharmacists can’t sell you prescription medicines. In relation to QAR, the pharmacist (unqualified reps) can.
The answer is they need more GPs (advisers) with less red tape, so that they can service more people at less cost. They can even answer those basic matters you refer to.
But Chemists are at least qualified in their field. After all the years of trying to get financial advisers to an appropriate level of tertiary qualifications, this is suggesting that the Coles night fill can provide advice. Its just too much of a step backwards
Haha imagine going into the chemist and then asking the security guard what prescription medicine you should be taking for a health issue. Is this what Levy is proposing for financial advice?
I wonder those who are negging this can provide a reason why as I definitely see Anon’s post point he’s trying to get across.
So let’s extend the proposed provisions to legal advice as well and open the ability for the working and middle class to receive subsidised low cost legal services. I wonder how many legal practitioners would be in favour of more accessible lower cost legal advice? Not everyone needs a lawyer’s appointment for every legal matter, sometimes for a one off, non-litigating threatening issue would work just fine.
True, Anon. But the stakes for a Chemist are tiny. The stakes for a conflicted advice giver and their owner are huge.
“Meaning and lasting change”. I have been an adviser for 22 years. This industry has done nothing BUT change. I’m tired. Can’t wait to retire.
I was just pondering the legal profession. It is not affordable and accessible to all Australians. I have a real solution to make that more accessible and more affordable for more Australians. Let’s do a review and allow a cohort of people with strong conflicts of interest who can provide unqualified personal legal advice at a discount to make it more affordable and accessible. They won’t have to have degrees, CPD points, one off exams, codes of conduct and professional years to be an “Authorised Provider” of legal advice. Just open it up and see where it goes! As a qualified professional I am certain Michelle and her Profession would be on board with this change! Look at these recommendations plainly and ask what Profession in Australia has ever had this done to them! Just Advisers once more. The Medicare system needs more access and affordability next……What could go wrong. Perhaps Pilots….
100% Adam, perfectly said!
Great observation. Lawyer like Doctor can not be touched by regulators.
You’ve gotta hand it to Minister Jones. Prior to the election he was making all the right noises to get those in the financial planning space to vote for him, “it’s a hot mess”, “I’ll be able to get some quick wins to cut through the red tape”, etc, etc, etc, Blah, Blah, Blah!
The story so far from minister Jones…I can’t do the quick fixes I thought I could because they have to go through the legislative processes & that takes a lot of time & massaging (don’t tell me he wasn’t aware of that whilst making those pre election assertions!)…let’s wait for the QAR report to be delivered before I do anything…he gets the report before Christmas…it’s on top of my summer reading list, he says…it’s finally dropped this week…now he says he needs to approach all stakeholders for their views on the QAR.
What a joke, does anyone really believe anything will be done during this term of parliament? I think not!
Speaking of jokes, it’s a sad indictment on politicians (and us poor mugs who vote for them), that a comedian who died over 45 years ago accurately sums up the “hot mess” they all are.
“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.” – Thank you Groucho Marx…may you always rest in peace.
Given that Australia has now become the most inefficient nation in the world, in order to access advice service support, the focus needs to be increasing efficiency, so as to reduce costs for consumers. That can only be achieved by eliminating Annual Fee Consent Renewal Forms and revert back to initial flat (ongoing) fee disclosure, with the ability to Opt-Out, as exists in every other nation on earth. Until this happens, 2 million consumers will remain stranded orphans in the system, doomed to spend hours on a platform hotline, not unlike when having to call Qantas. Most of adviser admin work revolves around service support, not advice. Annual Fee Consent Forms are a 19th Century brain fart that is costing consumers millions in extra tax.
Given what the Professional Independent Financial Advisers have had to endure from a regulatory perspective over the last 20 plus years, I think the focus on the consumer and trade-offs to allow the Instos back in is a huge slap in the face to the good advisers that have done absolutely nothing wrong, and continues the contemptuous view of professional financial advisers from the policy makers and regulators. The attitude and positive spin being funneled this week of the QAR fails to address the damage – both financial and mental, that Govt. and regulators have inflicted on the advice profession. The current attitude is to sweep all of the bad doing by the Banks and Instos under the carpet, and let them back in the game with a free pass. Trying my hardest to be objective here but I’m not buying it sorry.
It’s true that the process has been frustrating. Sadly and regrettably the weight has been too much to bear for many of those impacted. I guess any evolution is somewhat painful for those who are part of it. But we can only deal with where we are now… and the reality is very evident that the need for advice / service vastly exceeds the capacity of the remaining adviser population to deliver it. A balance needs to be achieved. Is this the way to do that? Only time will tell.
100% agree. This has to be about re engineering the delivery of wealth management solutions. All participants should benefit by the recommendation. But the primary focus has to be increasing accessibility, which in turn naturally circles back to making the delivery of advice easier.
What makes you think that she an authority to hand down any report regarding the Financial Planning industry? What are who credentials?
Well for one she actually is independent. Anyone with skin in the game shouldn’t have been allowed to do this.
If you are independent you don’t know the industry, if you know the industry you aren’t independent. It can be argued both ways. She seems to have done a better job than the previous legal professionals that have looked at financial planning but realistically she has come with her own biases and this needs to be acknowledged. Let’s not forget that every review for the past 10 to 12 years has had a core focus on making advice more accessible and they have all failed miserably.
Independent you say…based on her website disclosing that quote – “Michelle’s clients include the wealth management areas of each of the major banks, life insurance companies and industry and corporate funds”. Sure – independent as you say with no conflicted interests…
Don’t forget her appointment by Jane Hume, who worked for Australian Super. Is that an independent appointment? It’s also probably part of the reason the super funds were given a free kick, plus the robo advice providers, because Jane is somehow a tech expert in her capacity as a member of parliament. This was all set up from the start.
Levy sells legal advice to the large financial institutions. The same ones she says should be allowed to use unqualified, untrained, inexperienced, backbackers to flog product under the false guise of financial advice.
How do you figure that An?
“It’s time for the industry to come together and use the report as a launching pad for meaningful and lasting change.” Really Maja????
All heads to another RC in 5-7 years to again realise vertical integration/blanket service fees = conflict of interest!!