What does the financial advice industry need to get back on it’s feet?

The release of ASIC’s Report 627 “Financial Advice: What Consumers Really Think”, stated that along with all of the Australians who have received professional financial advice, 90 percent intend to get advice again in the near future.  That is an excellent outcome for the advice sector.

What ASIC’s report also revealed was that almost four times as many Australians who received advice in the past year had ‘trust’ in financial advisers, compared to those people who had not received advice. Does that mean that advisers are now doing a good job?

Since the absence of the large institutions and the ‘fee for no service’ issues, the industry has improved overall, and the adviser is understanding of what is required now and into the future.  That is not to say that we did not know previously. However, it is more prominent and understood with tighter regulations around this from ASIC and the compliance team.

Surely these are positive results for the advice industry.  But they are still not reflected in the level of support we are receiving from the Government or from ASIC themselves.

We have gone from 30,000 financial advisers to around 18,500.  The advice industry is expected to shrink to 15,000 in 2022, as a further 1,345 advisers depart the industry following the latest FASEA exam.  We will see more removed or resign from the industry by 2024.

So, the question must be: What does the government need to do to get the industry back on its feet?

Unfortunately, the media has driven the negative sentiment that all financial advisers are ‘thieves’ and ‘dishonest’.  That the ‘horror stories’ would continue unless all financial advisers were gone, or under government scrutiny.  We know as financial advice professionals that this is simply not the case.  Having been in the industry for the last 25 years, I have always found financial advisors to be committed to their clients and find meaning and purpose in the work they do.

We have seen the reforms implemented.  We also need a positive industry spokesperson to take control in the wake of the Royal Commission, which I feel both the FPA and the AFA have failed.  For example, advisers do not have any control over product failures, but this fact was never part of the public debate.

It must be remembered that most of the industry is considered ‘small business people’.  They invested their own savings to build their business and most followed the rules to the letter.  They are now suddenly looking down the barrel of a significant and permanent loss of income and even worse – loss of their business.

Australian financial advisers are suffering from poor mental and physical health, with many blaming high regulatory and compliance demands at work as a key factor in their stress levels, according to research sponsored by life and health insurer AIA Australia.  Over 700 financial advisers participated in the study, 82 percent of which found regulatory and compliance requirements to be highly or very highly stressful.

For the advisers that remain, the stress emanating from the recommendations of the Royal Commission and the government’s contentious mandatory professional standards regime is having a devastating impact. It is at the point where a few licensees actually have some of their financial advisers on a suicide watch list. Something must be done.

Advisers are now wondering what is next for them.  We do not have the answers but want you to know that if you are struggling, you are not alone.  Please reach out to us for help.  We will always be here for you.

For 24/7 crisis support, call Lifeline 13 11 14

You may also like

How to ensure you’re acting in your client’s best interests

Running a profitable business can be a tough job, particularly in these challenging times and with the new FASEA laws in place. Find out how to ensure you’re always acting in the best interests of your client.

Read more

COVID-19: Government support for businesses

Here we have summarised the COVID-19 government measures to support businesses in clear, simple language.

Read more
Talk to us

Build your best practice.

And help your clients create the best financial future possible.

Speak to us today

Arrange a call back

  • Hidden
  • This field is for validation purposes and should be left unchanged.
Untitled-2 Untitled-2

Arrange a call back

  • Hidden
  • This field is for validation purposes and should be left unchanged.
Looking for something?