The government and regulators need to start trusting the financial advice industry more given the regulatory overreach it has placed will result in poor outcomes in the long-term for the end investor.
Synectic Group financial adviser, PJ Cameron said while regulation was not the issue, it was the way it was applied in a uniform, one-size fits all approach which led to increasing costs, less choice, and less freedom. This he said, led to poor outcomes for advice clients.
“I don’t think there’s a structural problem but from a regulator’s perspective they need to start trusting the industry a bit more,” he said.
“A few bad experiences have resulted in quite punitive responses, particularly from the Royal Commission. I think underlying a lot of the regulatory response was actually a belief that advice wasn't valuable and that it was actually needed to be really heavily dealt with.
“Some of those things such as the independent tests and fee arrangements were a bit heavy handed. Yes, some regulation is needed but not too much overreach.”
He noted reform was most important at the big end of town and that most advisers had been reasonably well behaved over a long period of time.
One reform Cameron said would be helpful for the industry was making upfront advice tax deductible as it would encourage people getting advice who would not otherwise be able to afford it.
Despite droves of advisers leaving the industry, Cameron believed it was a good time to be in advice.
“The ones that stay are just going to get more focused which is a real positive. People's complexities are increasing and the need for advice is there,” Cameron said
“Even what we do as advisers is evolving. We're forced to evolve beyond just being product recommenders to genuinely getting involved in strategy, the behavioural finance side of people's lives, the relational side of it, and getting a bit more hands on in the investment side too.
“As our service proposition grows, our technology tools grows and the competition decreases as people leave the industry. I think it's a good time to be in advice and I think it's quite positive.”