COVID-19 highlights industry burden

25 March 2020

Advisers are already overburdened during the economic crisis from the COVID-19 pandemic, further proving stress on the industry will be an issue in a future crisis, if advisers continue to depart the industry.

With advisers already leaving the industry and more expected when deadlines from exam and education requirements come into effect, the COVID-19 situation had shown the financial advice industry may not be able to deal with a future crisis.

Ben Marshan, head of policy and standards at the Financial Planning Association of Australia (FPA), said it was lucky that it had happened now since a lot of planners who might still be looking to leave the system haven’t done so yet.

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“We haven’t got to the exam deadlines yet, but that looks like it would be the first big drop off,” Marshan said.

The Federal Government had put up several initiatives, including early access to superannuation and wait-time waivers for Centrelink, but these options had been overwhelming to navigate and advice was needed.

“Our members are telling us they’re being inundated from their clients, asking about markets, how to take advantage of the stimulus package the government has put out, and all these issues around applying for Centrelink,” Marshan said.

“Our members are inundated; they’re really struggling to help their clients properly… It takes up to 26 hours to provide a piece of advice that costs about six and half thousand dollars.

“In an environment where people need quick straight answers to make really important decisions about their financial position when they’re losing their jobs, when markets are crashing, our members are struggling to keep up with workloads to help their clients at the moment.”

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SunSuper released some interesting findings that their advised clients were much less likely than unadvised clients to crystallise downturn losses by panic switching into cash after the event. I think it's safe to assume this trend applies across all super funds. It's a great illustration of the benefits to consumers of an ongoing advice relationship.

Meanwhile ASIC is charging ahead with measures that severely restrict clients' options to pay for ongoing advice. They are trying to make ongoing advice payment so complicated, cumbersome, and expensive that most consumers will be forced out of ongoing advice relationships. How is this in anyone's best interest?

a crisis like this one shows how bad our laws and regulations are. client's need help. they don't fucking care about what i have to do to help them.

let's make the fucking regulations simple so we can help clients so that we do not have a compliance industry on the back of the regulations

if the regulations require a new industry to be created to cope with them, the regulations are bad to begin with.

If I ring my Lawyer in relation to a matter, they will provide some guidance and advice as to how I should approach an issue and summarise what will be needed to be done in order to facilitate the best outcome.
They may then send me an invoice briefly outlining the advice and for their time.
They will make some file notes as to the basis of our discussion and whether any follow up may be necessary.
What they wont do is ask me to complete a 10 page client data document and send me a 30 page Statement of Advice and an updated FSG every single time I phone them or see them to sort out a query or to gain an understanding of a matter.
How ridiculous has this industry become in regard to the volume of over regulation and compliance and the cost of time and resources to produce documentation every single time you open your mouth to a client who you have had a close relationship with for 15 years plus !!!
It has become completely unworkable and is rapidly reducing advisers ability to operate in an efficient and effective manner to service a broad range of client demographic.
We don't all live in a big city where we can elect to only work with XYZ client models who all pay a fixed fee of $5000p.a. or more for their annual advice package.
When you work in regional Australia or country Australia you work with the community because if you are good at what you do, the community send each other to see you, because they trust you and they trust your judgment, experience and ethics.
This is where the reality of what the majority of advisers do week in week out, has been hijacked by Govt, ASIC and all the other hangers on who believe that a massive and repetitive paper trail actually constitutes the basis of good advice.
What a crock of shit.
This business is totally over regulated and is drowning in a sea of compliance requirements which have been politically and ideologically driven in an attempt to dismantle.
In the end, there will be no where near enough advisers remaining to service and look after everyday Australians who require the relationship and trust provided by a good adviser.
The whole model needs to be re-thought so that advisers can practice in an efficient way and in the best interest of their clients.

Too true. Any adviser who has to offload clients or decline new ones due to regulatory cost, should send those people straight to their local federal MP. Consumers are finding it harder and harder to access affordable, professional, advice due to over complicated regulation. Regulation that is supported by both sides of parliament.

Politicians and regulators have made it clear they don't care in the slightest about the impact on advisers of over complicated regulation. Many politicians (particularly Frydenberg) actually see adviser persecution as an easy way to win favour with the media. Local MPs need to hear directly from their constituents about the problems it is causing for consumers.

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