Guard rails critical to DBFO super advice delivery
No one should be ignoring the potential role and possible dangers entailed in industry superannuation fund advice models over the next five years and the need for suitable guard rails, according to the My Dealer Services managing director, Alexander Euvrard.
Discussing the realities confronting the financial planning profession in the wake of the return of the Albanese Labor Government with an increased majority, Euvrard pointed to the need to avoid the mistakes of the past where change and regulation are concerned.
He said that after waiting many years for meaningful change in the wake of the Hayne Royal Commission he was excited by the way decisions around the Delivering Better Financial Outcomes (DBFO) and Quality of Advice Review (QAR) reforms evolving and leading to potential new business models and competitive offerings.
He said that, at the same time, changing technology and specifically artificial intelligence (AI) was having a seismic impact of advice and the industry’s ability to provide lower cost, tech heavy advice models that could serve more clients.
Euvrard said he believed the industry could avoid repeating the mistakes of the past if regulators put in place careful guard rails before allowing large superannuation funds to provide financial advice to members and the immediate challenge of increasing qualified adviser numbers was given the critical focus it deserved.
“We can’t ignore the potential role of, and the possible dangers within, industry super fund advice models over the next five years. I do want to say simple advice done well and accessed by Australians needing it is a game changer.
“These are people who largely do not fit into our business models but absolutely need the access to advice. For those that may be younger, having access to simple advice is actually going to benefit all of us as they will be exposed to the value it creates and be our clients of the future.
“However, allowing lesser qualified advisers to provide this advice at probably the most important time in a client’s life is dangerous and this is without mentioning the dangers of life income products and locking clients in,” Euvrard said.
He said the only way to increase numbers within the advice profession – now at an all-time low of around 15,000 – was to reduce the red tape around entry level education requirements and remove the policy brick wall that made it difficult for people with tertiary qualifications to transition to advice from any other industry.
“The biggest challenge facing advice practices that we see and hear about every day is the lack of advisers to help grow and support these businesses. It all comes back to making the profession attractive to new entrants and making it achievable to enter,” Euvrard said.
Doing a Kaplan or equivalent graduate diploma for a career changer with an existing degree to get the relevant skills to be a good planner is not as difficult as some would make out. Greater barriers are the cost to be newly licensed including CSLR and ASIC levys that aren’t affordable to newly qualified planners or their employers with minimal initial revenues on top of heavy licensing, PI and software costs. Advisers lacking any relevant formal planning education are not the answer. Scalable costs rather than flat fees are. Also asking new planners to pay thousands for the sins of unethical and incompetent colleagues including large corporates still trading is simply not sustainable.