Advisers are currently waiting to hear back from Financial Services Minister Stephen Jones on his response to the Quality of Advice Review (QAR), which is set to arrive sometime after the May budget.
While patience has been wearing thin as the question of how the industry might be impacted hangs in the air, advisers have been urged to tread lightly.
With the aftershocks of the royal commission serving as a more recent reminder, one adviser has said that “ramming” through legislation can uproot the advice landscape, stating that it has the potential to pull the rug out from under their feet.
Philippa Hunt, Artemis Investments (NSW) director and one of the few women in Australia who holds her own privately held Australian Financial Services Licence (AFSL), with 20 years of advising experience, explained that the delayed response to the QAR is a welcomed sign that the minister is “taking his time to get it right”.
“The minister releasing his views after the budget is more practical even though we want answers now,” Ms Hunt said.To this point, she added, Minister Jones has “done what he said he would do”, which is to consult widely across the industry and “stress test” the findings before he makes potentially industry-altering decisions. On the board of the AIOFP, Ms Hunt said the body regularly consults with politicians on both sides, and with Minister Jones particularly over the past three years leading up to the federal election.
“If he had jumped in and did what the previous [government] did and implement huge changes without consultation and did not take into account the ramifications on clients and advisers, he would be pilloried and castigated when it failed. And the mental health of advisers would be an issue again,” Ms Hunt said.
Last April, ifa exclusively released the results of a survey investigating the mental and emotional wellbeing of Australian financial advisers, conducted by Ms Hunt and Forte Asset Management founder and director Steve Prendeville. This report was published widely across the industry and the Minister, who was informed of the project, was sent his own copy and was made aware of the state of mental health across the industry.
The figures were quite alarming, with 80 per cent of participants conceding that their rate of stress had “significantly increased” since the royal commission and consequent government legislation, while 21 per cent said they had entertained thoughts of self-harm.
As she looks towards the future, Ms Hunt is hopeful that the QAR will bring about a different outcome for advisers and clients alike. Given Minister Jones’ recent predicament of having to “clean up a hot mess” that, she said, took three years to create, Ms Hunt argued that thoroughly considering the report is crucial for the future of the industry.
“The issue is what part of the findings to get done to start fixing the mess,” she added.
Ms Hunt told ifa that the QAR’s recommendation to eliminate the ongoing fee regime is particularly relevant in light of the Mental Health Survey.
Specifically, the most significant challenges for advisers with regard to the rising time and costs associated with serving clients are related to the fee disclosure statement (FDS) and fee consent forms from product issuers, she said. Fund trustees’ ability to dictate advisers’ remuneration was a significant concern.
If many of the QAR recommended changes on the ongoing fee regime (OFR) and fee consent forms are implemented, advisers would have the ability to take back their own agency, Ms Hunt added.
“Fees are clearly set out in the statement of advice, application forms and super fund reports, and personal account information online is available 24/7. The client knows what fees they are paying to the adviser and the fund manager,” she said.
One recommendation that would likely not be a quick win, she conceded, is allowing superannuation funds and banks to return to advice.
“The other finding about allowing banks to get back into advice is hotly debated and likely to cause a reaction when the banks had to repay unfair fees and their behaviour brought about the Royal Commission. Now they have gone and the feeling is to not have them back,” Ms Hunt said.
Ultimately, Ms Hunt believes Minister Jones should be granted the space to respond without too much interference and commentary. She said he is aware of the mental health of practitioners, in addition to the number of advisers leaving, and getting it right could ameliorate some of the issues at hand.
“I think it would be respectful to give the minister the space to review, consult and decide without commentary of why he hasn’t jumped on the recommendations immediately, especially with the mental health considerations and ramifications for the industry long term,” she concluded.
If you are suffering from depression, anxiety or suicidal thoughts, or you’re worried about someone else and feel that urgent professional support is needed, contact your local doctor or one of the 24/7 crisis agencies below:
Beyond Blue: 1300 22 4636 https://www.beyondblue.org.au/
Lifeline: 13 11 14 https://www.lifeline.org.au/
Suicide Call Back Service: 1300 659 467 www.suicidecallbackservice.org.au
The damage to Financial Adviser’s mental health has been devastating.
In many, many cases, it is irreparable & permanent in nature.
Without being sensationalist or overstating this issue, it has been one of the most damaging, discriminatory & prolonged attacks on a single occupational group in history.
The long term effects on individuals is significant & long lasting.
Many will never truly recover their self worth, stability and self confidence.
There is no need for further reviews of reviews or consultation about consultation. The fixes required to the regulatory mess are clear and obvious. Jones is deliberately delaying because he has no intention of doing anything. Admit it AIOFP, you have been conned by Jones. It’s time to redirect your efforts into a focused campaign against him in his Illawarra based electorate.
Every voter in the Illawarra needs to know the reason they can’t access affordable, professional financial advice is because their local member has failed to do his job.
They didn’t care about mental health before as we were seen as crooks so why start now? Bureaucrats and politicians have little skill in the game and poor understanding of reality. Glad I’m out but it has taken its toll with a lack of self confidence in simple jobs.