Minister for Financial Services Stephen Jones has continued to cite the new class of advisers as a way to reduce legislative complexity in financial advice.
The minister spoke at the AFR Super and Wealth Summit earlier this week, noting current legislation as one of the major issues plaguing the advice profession.
“The financial advice laws in the country are not fit‑for‑purpose. It’s too expensive. Too hard to access. And too strangled by red tape to be helpful,” he said.
Jones cited that four in five Australians aged 45–54 say they need advice but lack the capacity to pay for it, while 74 per cent of Australians aged 18–34 have been found to have unmet advice needs.
“We have set out to implement the most significant reforms to the financial advice laws in a decade,” he continued, referencing the proposed Delivering Better Financial Outcomes (DBFO) legislation. “We have delivered the first tranche of reforms. And the next tranche of reforms is being drafted and prepared for introduction.”
One part of this legislation, included in the second tranche of reforms, is a new class of advisers, temporarily called “qualified advisers” which was first announced in December 2023, as a route to delivering simpler advice.
It is Jones’ intention that this will enable financial institutions, such as superannuation funds and insurers, to provide simple advice at scale to Australian consumers.
“We will create a new class of adviser who will be able to provide simple and safe advice.”
However, Financial Advice Association Australia (FAAA) CEO Sarah Abood said the organisation’s members still have qualms with the name. For example, changing the title of this cohort to an appropriate name without the word “adviser” is critical to FAAA members.
“The name, of course, is incredibly important for many of our members and I think the government underestimated how important that is. Many members don’t want to see the word ‘adviser’ in there and we need our members to be able to offer this class of advice,” she said on a recent FAAA webinar.
Moreover, there is greater guidance and clarity needed in regards to the scope of services these advisers can provide.
Abood added: “Probably the most important piece of all around the new class of adviser is what can they talk about and what is the scope, how will it be defined? Because what they can do is not as good as what a proper, professional licensed financial planner can talk about.
“How will we restrict their scope and how will we make it clear to consumers that the service they’re getting from this group is different to what they can get from a professional adviser?
“Our suggestion is the simplest way to limit the scope of the new class of adviser is to limit them to engaging with the consumer on products that they already hold and that removes a lot of complexity.”
Also speaking on the webinar, FAAA chair David Sharpe said that boosting the overall cohort of professional advisers remains critical as falling numbers is an “existential threat” to the industry.
“The declining numbers of our profession, if I can be blunt, is an existential threat to financial planning. That’s more of a medium- to long-term issue. We know it may not be affecting our members right now, but if you’ve got a business and you need staff in two or three years’ time, it’s absolutely going to be impacting you,” he said.
