‘Plaything of the wealthy’: Access to advice needs to be solved

Appearing on Ausbiz last week, DASH Technology chief executive Andrew Whelan argued that with the impact of consistent regulatory change making financial advice less affordable for Australian consumers, any measures that can bring that cost down need to be explored.

“It’s been a really tough time for financial advice over the last decade. I think even ASIC themselves would admit that they’ve overregulated the industry. The Labor government’s trying desperately with QAR to unleash the power of advisers or free them up from a lot of red tape, but the royal commission was damaging,” Whelan said.

“I don’t think ASIC would have necessarily – they might have been surprised that all the banks packed up their bags and left the industry completely, which has meant that with the regulation, financial advice has been a plaything of the wealthy.

“Only one in 10 Australians get advice and particularly around retirement, it’s a really complex issue. That’s not enough. You compare that to mortgage holders and mortgage advice seekers. There’s about six in 10 people who take out a mortgage get advice. Advice is lagging significantly, and this is a problem that needs to be solved.”

Whelan noted that the Quality of Advice Review measures that are set to bring institutions back into the advice fold would bring a level of advice that is more affordable, even if it doesn’t help increase access to full service financial advice.

“One of the, I think, unintended consequences of the royal commission and this overregulation of the advice industry, is that now, it is just a plaything of the wealthy because it’s so costly to generate and provide advice,” he said.

“But thankfully, now the government is trying to relax that pressure, that regulatory pressure. As a result, what we’re seeing now is big, trusted brands like the banks, global insurers, industry funds investing in technology to provide advice digitally, possibly typically for free as part of their distribution strategy. I think we need that desperately, or Australians need that desperately.”

According to Whelan, the way forward for advisers is learning technology to provide advice to clients in the way they want to receive it, particularly given the number of younger Australians that are getting their financial information through social media.

“People are seeking advice and they want to find it in a way that really suits them. What we’re seeing, particularly from the younger generations, Gen X and below that, they are seeking it, they’re receiving it, but they’re receiving it in a way that suits them rather than their parents,” he said.

“The challenge for us in adviser world, and for financial planners who are our clients, is to adapt to these changing preferences, because surely you want to be getting advice from people who are trained, qualified, regulated.”

This can, subsequently, help financial advisers deal with the growing number of clients that have no interest in coming into the office to meet with their adviser.

“Particularly with dual income households, it’s impossible to find the time during a nine-to-five working day,” Whelan said.

“What we’re finding is not necessarily replacing the need for advisers, people with complex needs still want to talk to someone before they sign on the dotted line and make a big change that’s going to have sweeping impacts.

“But what we are finding is that between the Baby Boomers, 75 per cent of them want to go and see people face to face. Gen Xers, the next generation down, only half of them want to see someone face to face.”