The complex compliance framework for financial advice is causing more difficulties for those who are multi-disciplinary financial advisers, according to Lifespan Financial Planning.
Commenting on the recent departure of accountants from the financial planning industry, Lifespan chief executive, Eugene Ardino stressed that the complexity of the framework was particularly difficult for accountants.
“I would agree that a lot of accountants who are also financial planners exited financial planning and I think a lot of that has more to do with a fact that the compliance framework for financial advice has become more and more difficult,” he said.
Further to that, Ardino stressed that this was the group who was often wearing two hats, and operating both in the capacity of an accounting practitioner and a financial advice practitioner, and typically had smaller businesses for which the framework in its current shape caused a lot of concerns.
“[Accountants] have found that for the amount of time they have to spend to keep the wheels turning in financial advice is not worthwhile so they are exiting [the industry] to focus on accounting. That is why I said that being a multi-disciplinary financial adviser has become very difficult,” he said.
“It’s still possible for some to do it but it has become very difficult which is a little bit sad because the accounting profession is a very well-respected profession, and to see a lot of these professionals exit the financial advice is not a good thing.”
Lifespan said that although most of its advisers were holistic advisers, it also had specialists who offered limited scope advice, but many of those offering the specialist advice would be still able to offer the advice of the holistic nature.
“We encourage all the advisers to give a holistic advice and most of them do but we also encourage and support the limited scope of advice where it’s appropriate,” Ardino said.
“I think often advice is limited in nature as clients don’t always want you to review their entire circumstances. Instead, they often want the advice just on their investments, or just their super, or retirement planning or insurance in the area that sometimes is a specific piece of advice and we fully support that. Because you need it as you’ve got to be able to give clients what they want.”
At the same time, Ardino said that the legislative framework for limited scope advice also required improvement and that the Financial Adviser Standards and Ethics Authority’s (FASEA) code of ethics was one of the layers which added to the uncertainty in this area.
On top of that, the financial planning as an industry needed more stability, otherwise the numbers of advisers would continue to plummet while the demand for the advice would continue to grow strongly.
Additionally, the accessibility to the financial advice was not very good which would mean that despite the increasing demand for advice, the number of people in the community who could afford advice would be actually going down.
On the other hand, advisers were doing quite well in the moment as far as their client base was concerned. Ardino said that, despite most advisers being able to grow their number of clients at the faster rate than ever before, this was currently driven only by an overall huge reduction in a number of financial advisers and the exit big banks and institutions.