Industry needs to better address value of advice
The financial advice industry needs to do a better job of addressing the value of advice, not just the cost of advice, according to a panel.
Speaking at the Financial Services Council (FSC) Future of Advice summit, Danielle Press, Australian Securities and Investments Commission (ASIC) commissioner, said the industry needed to do better at articulating the value of advice.
“We can reduce the regulatory burden, we can change the legislative landscape but if consumers don’t think there’s value in advice then it’s not going to matter one iota,” Press said.
“It’s about making sure we can better articulate the value of advice so that the cost doesn’t become the issue, whereas cost is central to the issue at the moment.”
Press said what simpler and less-costly advice looked like was when advisers were trusted to use their professional judgement and where the advice process was not over-engineered by overly-cautious licensees because they did not trust their advisers.
“It’s an industry that works sensibly in articulating some of the things we need to see improve and I think collectively to do that, there are a lot of voices in this industry and often the voices are not particularly well-aligned,” Press said.
“Which means you’re getting conflicting advice, not just in the regulatory space but in the government space.
“That makes it difficult to create a simple, cost-effective advice process when you don’t know what problem it is you’re trying to solve.”
Geoff Rogers, MLC acting group executive of advice, said it was too costly to provide advice and regulation was not the only reason behind that.
“It’s [also] the cost of doing business, digitalisation, and even the fact that this industry gets professional indemnity insurance which is 35% higher than last year with only two real providers in the country,” Rogers said.
“That’s a very serious issue if you’re a responsible manager or head of a licence as to how you handle that complexity and obligation.”
Bryan Ashenden, BT head of financial literacy and advocacy, said it was important to raise the value that people see in advice.
“It’s not about reducing the cost of advice until people can afford it, it’s more about the middle ground where you reduce cost but at the same time you’re lifting the value so people will be willing to pay the appropriate price,” Ashenden said.
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