The Financial Advice Association Australia (FAAA) has detailed strategies it is considering that can improve the efficiencies of advice practices without the need for legislation.
Earlier this month, Money Management wrote about how the Quality of Advice Review has taken over 830 days so far and a completion date is not yet in sight as there are two tranches of legislation to move through Parliament, although Minister for Financial Services Stephen Jones is targeting a May 2025 deadline.
With this timing in mind, the FAAA said it is exploring areas it can help advisers in already without the changes needing to be qualified by legislation around Quality of Advice Review.
Speaking at an FAAA roundtable in Sydney, chief executive Sarah Abood said: “We don’t just want to rely on the government to make these changes because we might be waiting a long time if we purely rely on government. We are running some projects now that are looking at whether we, as a profession, can standardise and bring efficiencies to adviser practices that we don’t need legislation for.
“There’s a project we are running now that’s in the pilot stage regarding anti-money laundering and counter-terrorism, and seeing if we can streamline or digitise that and potentially create an industry standard around that that can be practically implemented and help advisers find efficiencies in their own practice.”
This echoes comments by policy consultant Ben Marshan who said advisers shouldn’t expect QAR to be the shining light in solving their problems.
“If you want to improve your business and advice process, don’t wait for the QAR changes; start looking at where you’ve implemented ‘compliance’ and ‘risk’ measures that are significantly more inefficient and time-consuming than what the law requires you to do. You’ll make considerably more improvements to your business than what QAR might deliver.”
As to whether these efficiencies to reduce the cost of running a business will translate into lower costs for consumers to receive advice – a stated aim of the Quality of Advice Review – Abood flagged it is still a market economy.
“I’m often asked if we can get the costs down to provide advice, will advisers change their pricing? To me, that’s a non-issue because some advisers will and some advisers won’t. We are in a market economy, and if we make it possible for advisers to run a compliant advice business at a lower price point, then some will do that. Some won’t, but market forces will operate, and that will mean consumers will have more choice.”
She also said the low supply of new entrants to the market is a “super urgent problem” that needs to be solved.
There are currently 15,589 advisers in the marketplace, a 46 per cent decline in 2019, and only 312 advisers who first provided advice last year.
“The number of new entrants is not enough to offset the advisers who are going to retire. We could put another zero on the number and still not meaningfully impact the supply of advice. It takes four years to train an adviser, so we see this is an urgent problem and something we need to address in a meaningful way.”
I tell you that the AIOFP looks good right now given their allegations of Corruption within Treasury and a meeting with the Opposition, around concerns of Corruption…whilst the FAAA has already rolled over and are merely “disappointed” …shaking that wet lettuce…too afraid to upset AwareSuper it seems.
As far as new entrants go let’s remember the FPA significantly contributed by recommending a Bachelor of Financial Planning as the standard. A strategy without member consultation.