While the recent re-election of Labor has left many advisers feeling as though they will see very little meaningful change for the profession in the coming years, My Dealer Services (MDS) director and founder Alexander Euvrard suggested that the coming industry reforms could mark a new phase for the industry.
Speaking at MDS’ inaugural One Day Event in Sydney on Thursday, Euvrard noted that the Delivering Better Financial Outcomes (DBFO) reforms, particularly the introduction of the new class of advisers (NCA) to operate out of institutions such as superannuation funds, has potential value in servicing Australians who need guidance but not comprehensive financial advice.
“These are people who largely do not fit into our business models but absolutely need the access to advice,” Euvrard said.
“For those that may be younger, having access to simple advice is actually going to benefit all of us as they will be exposed to the value it creates and be our clients of the future.”
Even so, he said that it’s important to recognise the potential risks of inviting super funds back into the advice space, particularly after advisers have worked so hard to acquire the necessary qualifications after the education bar was raised and NCAs will likely require a much lower level of qualification.
“We can’t ignore the potential role of, and the possible dangers within, industry super fund advice models over the next five years. I do want to say simple advice done well and accessed by Australians needing it is a game changer,” Euvrard said.
“However, allowing lesser qualified advisers to provide this advice at probably the most important time in a client’s life is dangerous and this is without mentioning the dangers of life income products and locking clients in.”
One of the biggest arguments for NCAs is to help bolster the struggling advice profession which currently numbers just 15,602, according to the latest analysis from Wealth Data, after losing almost half their ranks following the royal commission in 2019.
With this being a long-standing issue for the profession, in February former financial services minister Stephen Jones announced that the government would introduce measures to reform financial adviser education requirements so that anyone with a bachelor’s degree would be eligible to become an adviser.
While they would still have to complete some mandatory classes and go through the professional year (PY), this would ultimately open up the profession to more graduates who may not have completed the strict degree requirements currently in place.
Touching on this, Euvrard noted the significant impact the education reforms could have in helping the profession rebuild after years of rapid change.
“The biggest challenge facing advice practices that we see and hear about every day is the lack of advisers to help grow and support these businesses,” he said.
“It all comes back to making the profession attractive to new entrants and making it achievable to enter.”
I’m surprised that no-one seems to understand that advisers who operate under a superannuation fund have a very narrow scope in which they can assist or advise members. There seems to be this thought and narrative that the NCO’s will replace advice for comprehensive FP’s and it will ruin the industry and FP’s will suffer and Australians receiving the advice will suffer.
It’s a very simple advice model that is being put forward, yet it’s causing such a stir in the industry, where the intent of the model is to provide information, and potentially advice if it’s within the scope of the individual’s needs. The DBFO proposals are not there to replace comprehensive advice, it is there to assist in the delivering of advice, and scoping of a clients needs to ensure the right people are getting the right information from the right advisers.
don’t be so naive Anon – only the Harvard trained Mensas that are true financial planners can be trusted to give any kind of advice or guidance!
Lol. Most AFSL Execs, Responsible Managers and Heads of Advice have little to no financial advice qualifications or experience anyway.