Australia’s effective handling of the coronavirus pandemic suggests we are more than just a lucky country. But the battle isn’t over yet. Millions of Australians are now staring at a harsh new reality: their first recession in almost 30 years.
Navigating this uncertain economic terrain will present challenges that many people have never experienced. It will threaten investments, businesses and livelihoods.
The value of strategic financial advice has never been higher and will play a central role in helping Australians protect and improve their lifestyle.
The advice industry must convince people to turn to financial advisers for help and strive to make advice more affordable and accessible.
Every financial decision counts in a crisis
Right now people are looking for clarity, reassurance and guidance. They want to know if their retirement plans are still on track, if they can continue paying the mortgage, and if they can survive on a single income.
In this environment, the old model that tied product sales and advice is useless. The true value of advice is really in helping people make better-informed decisions and keeping them on track to achieve their long-term goals.
Practically, advisers can help clients access government payments and subsidies, and review their investment portfolio and life insurance arrangements to ensure they remain appropriate.
Not surprisingly, those who receive strategic advice tend to be better prepared emotionally for a sharp downturn.
To date, Australians facing economic pressure from the pandemic have withdrawn $16 billion from their super funds under a COVID-19 early release scheme, according to APRA.
There is no question that many households desperately need cash now to cover bills and expenses like rent and groceries. We need to have empathy for those facing financial distress, while also recognising that many are unadvised and have made decisions without considering the long-term impact.
How many of these people could have stayed invested in super, if they sought advice and understood their options?
Given the complexities of our three-pillar retirement income system, advisers can analyse the way these pillars (superannuation, private savings and the age pension) interact for individuals.
They can also act as a sounding board to stop people making rash decisions.
Technology in a post-pandemic world
The pandemic that dragged Australia into recession has not only changed our lives, it has quickly changed the nature of advice. Just as social distancing has become standard practice, so too have online meetings. This promises to transform the way advice is provided.
With face-to-face meetings out of the question, advisers had to be proactive and find ways to check in with clients.
Technology is helping them stay connected and meet their duty of care obligations. For example, video conferencing in now integrated into the advice process for many practices. The onboarding process involves helping clients set up video conferencing solutions.
Offering video meetings, as an alternative to face-to-face meetings, can be more convenient for clients and significantly reduce travel times. It can also minimise the delays caused by scheduling, as video meetings can be more spontaneous. In the future, this will increase the frequency and meaningfulness of client contact and reduce costs.
Regulation will need to keep up. The current regulatory regime was borne from a good intent: to make advice more trustworthy and reliable, and strengthen consumer protections.
However, it effectively delivers a gold-plated version of advice that makes it difficult to help people with simple needs without reams of paperwork. There is even a term for this: reg tape.
Reg tape does not necessarily raise the quality of advice but if definitely makes it unaffordable for the average Australian.
While the industry must get behind the Code of Ethics and other reforms aimed at accelerating the journey to professionalism, we need to be confident that existing reforms provide a strong framework. If the right foundation is not in place, there is a risk of strangling the value of advice with regulation that increases cost and hinders the ability of advisers to meet clients where they are at.
This has never been more evident than now with people desperate for advice and guidance.
Allison Dummett, chief executive, ClearView Financial Advice and Matrix Planning Solutions
Is this bland, empty, nothingness the sort of thing dealer groups claim to be their value add?
More garbage from parasites