Costs imposed by ASIC and the government together with massive compliance overheads will be the primary cause of these failures.
The government is obviously unable to grasp the situation as to why financial advice is expensive!
The answer is very simple, it is the massive duplication of paperwork for example we must disclose our fees in our SOA, then again in our fee agreement and yet again in a document to be forwarded to the platform that pays these fees.
Now let’s take the SOA, it should only contain the advice written in plain English and based on the scope of the advice. Everything else should be removed.
There should be one fee agreement and that should be accepted by the platform as sufficient authority to pay any fees applicable.
Advice must be fit for purpose and should not be extended to include every scenario for example if we are providing retirement advice to a 50-year person, we should not be considering their aged care needs at that time. The scope of advice could exclude areas of advice that are not taken into consideration in preparing the advice.
As accountants we can provide affordable advice as we are not subject to the same level of compliance as our financial planning services. Accounting advice is far more targeted and is generally limited to a 2-page document including a scope of advice and the advice itself. The average cost is about $700 to $800, whereas the average cost of financial advice is about $2,500.
To get financial advice lower, the government wants to create the role of “Qualified Adviser”, whereas they should be simplifying the whole process to either “simple advice” or “complex advice”.
This would create a pathway to bring new advisers into existing firms which could meet the demand for “simple advice”.
William Mills Price Financial Intelligence