Financial advice fix will take time as adviser numbers continue to fall

The number of financial advisers continues to fall despite an influx of Baby Boomers who are preparing for retirement or have already retired and are desperate for quality advice.

There are fewer than 16,000 advisers, not nearly enough to assist Boomers with their retirement plans, let alone those who have simpler advice needs.

The Financial Advice Association of Australia’s Sarah Abood says there are initiatives underway designed to bring costs down, retain advisers and get more into the profession.Credit: Dominic Lorrimer

The number of advisers has been dwindling for several years as planners depart the industry following a series of scandals that led to the introduction of higher educational standards and a professional standards exam.

The lack of supply has seen the cost of advice increase, locking out many customers who could benefit from quality planning. Sarah Abood, the chief executive of the Financial Advice Association of Australia, says many more advisers are needed to comfortably support the large number of people who need help with their finances.

She says the existing regulatory and compliance requirements make the cost of advising a 25-year-old with relatively simple needs higher than it should be.

Abood says there are initiatives underway designed to bring costs down, retain advisers and get more into the profession, but it will take time to increase adviser numbers.

The Albanese government will waive the degree-level educational requirements for experienced advisers with a good compliance record, a measure Stephen Jones, the minister for financial services, said last month will “assist experienced advisers with a clean disciplinary record who have passed the adviser exam to continue to provide high quality financial [help] to Australians”.

The government intends to remove red tape that adds to the cost of advice with no benefit to consumers.

Superannuation funds will also be able to give personal advice to members, a key recommendation of a review into financial advice led by Michelle Levy, a partner at law firm Allens.

Ben Hillier, general manager of retirement solutions at AMPCredit: Natalie Boog

Currently, super funds are restricted to giving general, factual advice. That can be no more than a description of the differences in the fund’s investment options, or the fees charged.

Ben Hillier, general manager of retirement solutions at AMP, says there is no doubt that many financial advisers have had to reduce the number of clients they service simply because of the regulatory burden and compliance checks they have to go through.

He expects that will change as reforms are implemented, coupled with the use of technology that will see more people obtaining affordable advice.

“People need help – they are crying out for assistance, particularly for advice on retirement, which is complex as it intersects with tax, social security, estate planning and superannuation,” he says.

Hillier says there needs to be more “scaled” advice that could be phone-based, where super funds can play an important role in providing simpler advice.

Then there will be digital tools that provide automated advice, at very low cost, that will include the increasing adoption of artificial intelligence, he says.

Matt Esler, the chief executive of Padua Solutions, a financial advice technology developer, says good technology will also help close the advice gap. It can help reduce the hours spent by planners on developing comprehensive financial plans, and super funds are likely to embrace digital solutions more and more for less complex planning needs, he says.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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