In questioning whether financial advice is “too complex” for the average Australian, Sarah Abood has reiterated the importance of digital tools to address accessibility concerns.
Abood, the chief executive of the newly formed Financial Advice Association of Australia (FAAA), recently spoke at a panel hosted by law firm Hall & Wilcox on 12 May.
She criticised the complex legislative system underpinning the advice industry for leading to growing accessibility and affordability issues.
“It’s become almost impossible to navigate on your own,” she said.
“There are a lot fewer advisers than there used to be, and that is in part because the regulation has really snowballed in the last couple of years.”
The FAAA chief executive estimated that Australians would struggle to receive a piece of comprehensive advice for less than $3,500.
“That is certainly in excess of the expectations that the average consumer has in terms of what advice ought to cost them.”
When discussing digital advice’s role in the industry, Abood affirmed it was critically important, with many consumers expecting to receive information in an online format.
“If a fund didn’t have a digital strategy in some way for its members, then it would be very challenging,” she added.
In November 2022, she previously told members that financial planners could use online avatars for client meetings by 2030.
The issue for Abood was how far advisers could take digital tools, alongside what information was required to achieve a high standard of advice.
“The idea that you need to digitally engage with your members is critical, but you need to be able to find a way to help them more when they need more help.”
Whether it was a digital tool or a call centre operative providing advice, the more crucial question was if it was high-quality advice, Abood noted.
Moreover, it was imperative that the client actually understood how to apply the given advice to their financial circumstances.
“Traditionally, that role has been played very well by financial advisers. If someone will get a great output from a [digital] calculator, they will ask, ‘What do I do with it? What’s next?’”
“The idea of a digital tool being mediated and explained to a consumer by someone who has got the knowledge to do that, [alongside] the empathy and the skills, that will give the best result and the best outcome.”
With the Minister for Financial Services, Stephen Jones, expecting his position on the Quality of Advice Review in late May or early June, Abood further reiterated the list of “quick wins” that would assist in reducing the cost of advice by removing red tape provisions.
“There’s certainly a group of proposals that we think could be executed fairly quickly, and we’d like them to be,” she said, which included advisers not being required to provide statements of advice (SoAs).
The more complex proposals included the potential for non-relevant providers and superannuation funds to provide personal advice, which generated wide discussion and uncertainty.
