Overheads, statement of advice (SoA) preparation, rising regulatory costs and governance costs, and conservative licensee policies have been called out as contributors to the cost of advice.
The Australian Securities and Investments Commission (ASIC) released a summary of responses to its consultation paper on ‘Promoting access to affordable advice for consumers’ which gathered 466 responses from financial advisers, licensees, and other stakeholders.
The consultation found 146 respondents supported allowing a greater use of records of advice (ROA).
On limited advice, respondents said the top impediments were:
- Too costly to provide;
- Regulatory requirements for comprehensive and limited advice were the same;
- Concerns about meeting the Financial Adviser Standards and Ethics Authority (FASEA) code of ethics;
- Some advisers were unclear about regulatory requirements for limited advice; and
- Advisers were restricted from providing limited advice by licensee or other party.
On strategic advice, 138 respondents through additional examples of giving compliant strategic advice would be useful. Key issues on strategic advice included:
- Uncertainty about legal requirements and leading to concern about providing compliant strategic advice;
- Licensees limiting adviser ability to provide strategic advice; and
- More ASIC guidance was needed.
When it came to digital advice, 148 out of 215 (69%) respondents said they did not provide digital advice and did not intend to in the future.
The respondents cited a lack of demand, consumer preference for human advisers, and compliance concerns as barriers to providing digital advice.
Also, respondents believed the RG 244 on giving information, general advice, and scaled advice was too long and needed restructuring, it clashed with the FASEA code, and advisers’ licensee policies did not allow for the guidance to be followed.