Industry panel hopeful of role for banks to close advice gap post-QAR

A panel of industry experts believe there is a role for banks to play in providing advice but are expectant of the Quality of Advice review focusing purely on superannuation.

Speaking at a Financial Services Council (FSC) event, the panel represented three different sectors of the advice landscape.

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This included HUB24 chief executive, Andrew Alcock, Brett Jollie, managing director of abrdn and Kelly Power, chief executive of superannuation at CFS, discussed the paper’s recommendations.

Referencing how the package could change in the government’s response, which had been delayed several months, Jollie said: “It’s a hot potato isn’t it, if it gets shoved into the ‘too hard’ basket because of competing opinions that can’t agree on the model then that would be a bad outcome but it’s possible.”

Representing the superannuation space, Power said she was hopeful the changes would enable people with lower assets to obtain advice. She said the fund received 3,000 calls per month seeking advice and was only able to help around half of them.

“We all benefit from more people getting advice because people who get advice have more confidence, better asset allocation, better insured and more wealth and certainty in retirement.

“There is a chasm emerging, who is going to give advice to those people with $100k who aren’t getting advice? That is a disaster and it has to be dealt with.

“It won’t be the small boutique licensees as they have a lot of clients and really profitable and they are maxed out, it will be people like CFS and other industry and super funds.

“That used to be the role of the banks, they were the incubators bringing in the advisers and creating that learning platform. There’s none of that now, so our business would benefit from any of these changes [under QAR], we are being pragmatic that we can help those people with $100k.”

Expanding on her comments about banks, Jollie said he could see a role for them in providing advice despite their previous history which led to the Hayne Royal Commission.

“Anything that broadens supply is a good thing, there’s not enough financial advisers today so there is a massive advice gap and that won’t change overnight. 

“Broadening the base of super funds will help but it needs to be broader, what about purely investment advice, there has to be a role for banks in this. That has been controversial in the past but the guard-rails have changed and there’s a role to be played there, as well as for accountants and other non-relevant providers.”

He continued on to reference how the role for banks had played out in the UK since the Retail Distribution Review. The concept of vertical integration was also viewed less negatively in the UK, he said, than it was in Australia.

“There is a role for banks and we have seen that post-RDR in the UK. Providing the consumer protection guard-rails are in place, we’ve changed the framework a lot and have a process, there is a role for banks to play in advice and potentially super.”

HUB24’s Alcock felt banks returning to advice would help to prevent people seeking advice from unqualified and unregulated channels.

“Do we have an obligation to help citizens from themselves where they are getting advice from FB or their piano teacher or their neighbour. Why is that bad, if it is done the right way and managed the right way, to open up accessibility of information and education? There’s a gap being filled by other means that aren’t qualified or regulated at all.

“I’m sure, forgetting the past, if you have a commercial enterprise looking for growth which benefits people who invest in your business and a large client base to help, [providing advice] will always be strategic alternative for an institution. They might have moved away, they might come back, they might come back in a different form and that may not be bad. Most banks already have private wealth arms and advice channels.”

Power also referenced the possibility of any carve-out and said these should be applied universally.

“If there are carve-outs for best interest duty for specific parts of the sector, they should apply universally if they want to provide advice so there is a level playing field. There are great advisers out there who might to set up a call centre and help people and have supervisory processes in place.”