The efforts by the Financial Services Council (FSC) to reduce advice costs have been praised a “positive step in the right direction” by The Advisers Association (TAA).
The FSC released its ‘White Paper on Financial Advice’ this week which it said was a blueprint for a simplified regulatory framework that could reduce the cost of providing financial advice and allow advisers to spend more time with new and existing clients.
TAA chief executive, Neil Macdonald, praised the separation between product and advice and between advice and general information which would be a “giant leap forward” and meant advice could only be given by licensed financial advisers.
“This would help consumers better understand when they are being given financial advice and when they are merely being supplied with general information by a product provider, for example,” Macdonald said.
“The cost of providing financial advice, the onerous review requirements and the application of black letter law in relation to fee disclosure statements has made the delivery of advice too unwieldy and far too expensive. We can and we should do better than this.”
While he praised the blueprint in its current form, he said he was also keen to see it refined in the future to include clients receiving ongoing advice.
“This current version is mainly focussed on new clients, and not as much on the ongoing advice and services provided to existing clients to help them manage their relationship with money, give them real choices and achieve the life they want to live,” Macdonald said.
“While there is certainly more work to do, with genuine collaboration, and a focus on client and consumer outcomes, we are confident that the financial advice industry has a brighter future.”
The blueprint had previously been praised by the Financial Planning Association of Australia (FPA) who said the FSC had picked up on the concerns of FPA members.
“We commend the FSC on listening to the concerns of the FPA in relation to a number of their proposals which would have added substantial cost and complexity to the delivery of affordable advice to Australian consumers,” Dante De Gori, FPA chief executive, said.