Pressures of ‘over-regulation’ forcing advisers out of industry

Helen Baker, founder of the On Your Own Two Feet service and author of new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women, told ifa that she can’t recall any industry that experiences as much constant and significant changes as the advice industry.

“The latest regulations were for the purpose of professionalism, to assure consumer confidence, but we have to be careful not to over-regulate,” Ms Baker said.

“Over-regulation is putting an enormous amount of pressure on advisers’ mental health issues, the single adviser operation is being forced to merge, and many are leaving the industry due to the financial pressures, study pressures and increased CPD demands.

“The increased regulation means advisers have less time in front of clients, plus increased costs to the practice including the need for more back-office support.”

Ms Baker’s comments about advisers leaving the industry come after it was revealed in September that the total number of advisers in Australia has dropped below 19,000.

Ms Baker added that affordability of advice is also a key area of concern for the women she advises through On Your Own Two Feet and that it is vital that all Australians can access financial advice.

During a Q&A at the 2021 Adviser Innovation Summit on Tuesday (9 November), Audere founder Stewart Bell was asked if he believes ASIC should wear some responsibility in the fact that only 15 per cent of Australians seek financial advice, to which he responded by saying a combination of legislation and bad advice has hindered the sector.

“In truth, we went through a period where some of the issues, though magnified, were to do with the way advice wasn’t being provided right,” Mr Bell said.

“You could argue whether the legislation that’s been put through has necessarily changed things. I personally think there’s a lot of stuff in there which doesn’t necessarily fulfill a purpose.”

ASIC will now gear up for its new responsibilities of the recently passed Better Advice Bill that will see the financial services and credit panel within ASIC become the single disciplinary body for advisers from 1 January 2022.

The legislation will also see the removal of the Tax Practitioners Board (TPB) as an advice regulator and that FASEA be wound up, with its responsibilities to be given to Treasury and ASIC.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.