Government change of heart could stop adviser exodus

In a communication to members on Monday, AIOFP executive director Peter Johnston said it was important for advisers suffering significant stress due to the impact of regulation on their business to recognise that the government and regulators were now displaying more willingness to work with advisers.

“There has been a significant change for the better in the attitude towards advisers in recent times by all stakeholders,” Mr Johnston said.

“It is important that advisers recognise this for two important reasons – it may stop the mass exodus from the industry by advisers when the nation needs quality advice in a post-COVID world, [and] dilute the bitterness from past unfair treatment that has led to widespread mental health issues.”

Mr Johnston said the introduction of the LIF, poor implementation of the FASEA standards and removal of pre-FOFA commissions had “disrupted” the lives of the IFA community, but that the model of direct financial product sales through major institutions had been even more “discredited” through the royal commission.

“The royal commission ironically exposed the institutional advice culture, totally discrediting their business model and resulting in most institutions leaving the industry,” he said.

“The industry has been left with a largely discredited and rudderless political strategy to deal with.”

Mr Johnston said while it was too late to wind back most of the reforms that had been implemented in the industry in the past few years, representatives of the current government were trying their best to amend legislation that had made it challenging for advisers to run their business.

“ASIC and FASEA are classic examples of being straddled with legislation designed by former politicians where the only option seems to be amending detail to eliminate unintended consequences,” he said.

“The same can be said for current politicians who are now caught with the realisation that these unintended consequences are slowly but surely killing a once proud industry. Minister Hume has led from the front by amending the FASEA exam and degree conditions – let’s hope it continues.”

Mr Johnston added that the AIOFP would be presenting to parliamentarians around the other pressing issues needing addressing in the advice industry in Canberra next month.