Advisers declare 2023 priorities – experienced pathway and LIF

Mike Taylor

Managing Editor/Publisher, Financial Newswire

25 January 2023

The two policy issues needing urgent resolution are clarification of the detail of “experienced pathway” and the future of the Life Insurance Framework (LIF).

That is the bottom line of a Financial Newswire survey of financial advisers ahead of the looming release of the final recommendations of the Quality of Advice Review, with respondents expressing their disappointment and anger that the Assistant Treasurer and Minister for Financial Services, Stephen Jones, has taken so long to clarify the “experienced pathway”.

What the survey reveals that many of the issues raised in the QAR proposals paper published last year are not top of mind for financial advisers who are more concerned about matters which directly impact their careers and remuneration.

Asked to rank their priorities, just over 80% of respondents nominated the need for the need for the Government to clarify the “experienced pathway” – a proposal which was canvassed by Minister Jones as early as 2019.

Importantly, the “experienced pathway” has never fallen within the scope of the Quality of Advice Review and can be dealt with by minister.

The future of the Life Insurance Framework (LIF) has been bundled in with the QAR and so its future will likely depend on the final recommendations of the review as well as the data compiled by the Australian Securities and Investments Commission (ASIC) around levels around any remaining evidence of policy “churn” in the sector.

For is part, Jones has historically been strongly opposed to commissions-based remuneration but has subsequently signalled that he is open to being convinced otherwise.

However, it is the experienced pathway which garnered most expressions of concern from advisers who said they had placed plans on hold until the detail of the arrangements are mare made clear.

As one respondent stated: “We cannot afford to keep bleeding experienced advisers who are desperately required to hold the industry together for many years to come as well as mentor the next generation of advisers, assuming we can actually even attract enough of them in time.”

“The experienced pathway as promised by the Government at the last election must be delivered urgently, not just to retain existing advisers but to hopefully attract some who’ve left back quickly.”

Another respondent pointed out that “some advisers have put education on hold until a decision is made so this needs to be done asap”.

However, another respondent said: “Advisers have had years and plenty of time to adjust to the new education requirements. Education requirements are what will push the professionalism of our industry to a higher standard and is required. When there are only Advisers left in the industry who are wanting to be educated then this will (I believe) automatically push the best interest for clients higher without the need to have the compliance burden we face today.”

“The powers-that-be should be able to reduce the compliance burden then. Still a few cowboys around that are stuck in bad habits and need to exit the industry.”

On the question of the LIF, respondents said the issue needed to be dealt with as soon as possible and that a “return to 80/20 [commission] model would be the best solution”.

Another respondent argued that “commission on life products must be retained for the benefit of clients to obtain advice and coverage”.

“Certainty over commissions and fee revenue and dramatically simplifying/reducing compliance/paperwork for fee renewals are crucial for revenue certainty and cost reductions to keep fees lower and access to advice wider for Aussies,” another respondent said.