The financial planning industry has been set up like the law industry with the big end of town able to pay for the service and the rest falling to financial aid, like legal aid, a financial planning broker believes.
Connect Financial Services broker, Paul Tynan, said given the level of red tape advisers had to go through and the retrospective education requirements leading to the increasing cost of advice, the industry could only serve the wealthy.
“It's like, the Government, the lobby groups, and the consultants tried to set up advice like law. It’s like advice is a new legal aid. Is that what the endgame is?” he said.
Tynan said the conversations around the advice industry involved too many dealer groups, associations, and lobbyist and not enough financial planners that understood how the industry worked.
With large licensees looking towards digital advice to bridge the unmet advice gap for those that could not afford holistic advice, Tynan said it would only bring more corruption.
“With digital advice we’re going to have more shonksters you think about you sitting there on the computer or your phone? How many shonksters are you getting?” he said.
“We're going to have such a big problem and that's the problem ASIC [the Australian Securities and Investments Commission] should be looking at.
“The focus has always been on the poor planner but the biggest problem is going to be cybercrime. The people that are most vulnerable to these attacks are the people that don't have the wealth”
“People could be hiding anywhere and giving advice digitally.”
He said while digital advice could complement holistic advice, it did not help everyone that really needed help as often digital solutions could not help consumers execute actions needed.
“Some offerings allow you to add details such as your insurance, your bank, you get fees from your bank account, and all that. After paying a small subscription it gives you an overall view of your financial situation.
“But It doesn't help if you've got to execute. It can give you a very bare bones saying ‘you should look at your insurance’ but it can't help you execute.”