Sarah Abood, CEO of the Financial Advice Association Australia (FAAA), believes 2024 will be the year that meaningful regulatory changes are clarified and delivered by regulators to the financial advice industry.
The final Quality of Advice Review (QAR) reforms announced in December last year marked one of the most significant milestones for advisers in 2023. This year, the industry will look to see how the government handles matters such as the “qualified adviser” classification and what type of advice super funds will provide.
Speaking to Australian life insurer TAL, Abood shared her positive outlook regarding the state of the advice profession as it undergoes a “pivotal time of transformation”.
“I am optimistic that 2024 will be the year we see more regulatory clarity and certainty about the provision of financial advice – from both advisers as well as the broader Australian community and those who can benefit from receiving advice,” she reflected.
Three policy experts previously cast doubt on whether Minister for Financial Services, Stephen Jones, will be able to progress the Delivering Better Financial Outcomes reforms within a year. While the first tranche is expected to be completed by the middle of 2024, the second and third tranches could take far longer to come to fruition – even as far as 2025 or 2026, experts predicted.
However, Abood remains hopeful that advisers will feel concrete changes to the way they can deliver advice in 2024.
“There are many signs that concerns around regulatory complexities have been heard by government and regulators, and tangible improvements are starting to be made. It is our expectation that this will be the year that details are worked out and meaningful and positive regulatory changes will be delivered,” she continued.
The CEO cited the Governance Institute of Australia’s Ethics Index 2023, which saw consumers’ perceptions of the ethics of advisers continue to improve.
“In the last year, the Ethics Index recorded that advisers increased by six points from 16 in 2022, to 21 in 2023. The positive trend in public perception suggests the profession’s efforts to enhance transparency, accountability and ethical standards are gaining traction,” she said.
“Ongoing efforts in educating advisers, maintaining strong and lasting client relationships, and fostering a culture of integrity will be essential in further enhancing the positive trajectory observed in the Ethics Index for the benefit of clients and the advice profession as a whole.”
Driving new entrants into advice
A key part of improving the advice industry, in addition to regulatory implementation, will be supporting the next generation of advisers, Abood added.
“The power of connecting students with great future employers and career mentors should not be overlooked. By providing the right education and support to meet the regulatory requirements, we can encourage more new entrants into the industry which means more people will have access to the quality advice they want and need.
“It is incredibly important for us all to work together to help grow the profession, and we at the FAAA want to do all we can to help support new entrants.”
Anne Palmer, general manager for education and professionalism at the FAAA, previously spoke with Money Management on the two ways to bridge the adviser shortage.
“Number one is attracting people to study financial planning in the first place. The other one is keeping them interested and opening up opportunities for them to move in,” Palmer said.
In order to attract more tertiary students into the industry, she recognised the need for greater awareness of the profession to begin with, starting at the high school level.
“Not many year 12 students think, ‘That’s what I want to do’. Awareness is low at that age group,” Palmer stated.
