Adviser déjà vu all over again

Financial Advisers and industry super funds have a lot in common. They are groups that cannot stop talking about themselves and are usually never happy with how they are managed and regulated. They are always pressing for laws overseeing and directing them to be reformed; however, they complain that these laws change too often.

What’s really needed is for the changes not to be knee-jerk, but rather appropriate, effective and in the best interests of all parties. This hasn’t been the case so far.

Quality of Advice Review (QAR) is vital to evaluate if advice management and regulation can be streamlined efficiently. In the past three years however, between 2019 and 2022, the number of registered Australian Financial Advisers declined to almost 10,000. This figure represents a fall of approximately 40%, from 26,500 to 16,700. If the number of Advisers keeps falling this quickly, 3300 a year, Australia will have no human Advisers left within five years.

It indicates how viciously the tsunami of reforms this past decade has struck the industry, beginning with the Future Of Financial Advice (FOFA) reforms in 2012, followed by the launch of ASIC’s Financial Advice Register in 2015.

The height of regulation occurred with the ill-fated 2017 Financial Adviser Standards and Ethics Authority (FASEA), which lasted just a few years before it introduced even more regulation and then collapsed, leaving the industry with excessive regulation and and an unclear future.

This change led to revenue crush and compliance overload, drastically increasing operating costs for Advisers. These high operating costs have turned personally-delivered financial advice into a luxury that only the wealthy and high-income earners can afford.

The outcome of the QAR is yet to be published, which leaves the future of the industry in doubt at best.