‘A great position to succeed’: Industry bodies look ahead to 2022

Looking ahead to what’s in store for the year, we spoke with a number of bodies and groups within the industry about their thoughts on 2022.

Association of Independently Owned Financial Professionals (AIOFP) – Peter Johnston, executive director

The AIOFP board is very optimistic about the future of the advice profession and requests that any adviser considering leaving the industry for the wrong reasons please rethink their position.

The building blocks of FOFA under the ALP and FASEA/LIF under the Coalition are theoretically the right direction but some of the implementation guidelines of FASEA/LIF are brutally unfair. However, most politicians now understand our industry, know things have gone too far and the pendulum must swing back to balance in the near future. The lead-up to the next federal election will no doubt have a significant role to play in this process.

In addition, the recent CSLR debate has finally focused attention on the advice versus product equation and advisers will benefit from this awakening of roles within the industry.

Just purely from a number’s perspective, the reduction of advisers by 30 per cent over the past two years and the ever-increasing demand for advice from consumers place advisers in a great position to succeed in the profession.

Financial Planning Association of Australia (FPA)

Following the chaos of 2021 – when grandfathered commissions were removed, new rules around fee disclosure and consent came in, and the “October” reporting and DDO regimes began – not to mention the end (or was it?) of the FASEA exam transition – 2022 looks like being a fairly quiet year for regulatory change. 

Election years are generally quieter given Parliament shuts down and restarts. But with the Treasury Quality of Advice review to begin and the ALRC Review already well underway there are unlikely to be many, if any, changes to financial advice laws. 

This means 2022 offers a rare opportunity to focus on making our businesses and advice processes more efficient, more profitable and more engaging for our clients. The FPA has a lot of tools and resources to support members taking advantage of next year’s opportunity starting with some exciting developments in the production and delivery of SOAs that we will release shortly. 

Association of Financial Advisers (AFA) – Phil Anderson, general manager policy and professionalism

After a challenging 2021, where all financial advisers have been confronted by a tsunami of royal commission and other regulatory reform, and some advisers have still been battling to get through the FASEA exam, 2022 will herald a new era, where the focus will switch to improving access and affordability of financial advice.

Importantly, 2021 has demonstrated a very noticeable change in the public mindset with respect to financial advice with a resurgence in the appreciation of the value of advice.

There has also been an increasing level of awareness in the Parliament and the media that all the recent changes have contributed to making financial advice more difficult to access and reduced the number of advisers available to assist everyday Australians. As advisers have come to terms with the reforms in 2021, they are now increasingly ready to focus on working with their clients in this new world.

We will commence 2022 with a reduced, but more determined population of financial advisers, being a group that has been through a challenging few years implementing reforms, undertaking study and restructuring their businesses. 

The coming year will see a pause in the scale and pace of reforms as the government starts to focus on what needs to be done to fix what is not working in financial advice. This will be driven through the Quality of Advice Review that the government has committed to. This will also leverage the work that ASIC has done through the Unmet Advice Needs project.

The demand for financial advice will continue to grow and this alone will support a strong future for a profession that is now better understood and recognised.

The Advisers Association – Neil Macdonald, CEO

When we look back at the past couple of years, many of us won’t recall them fondly. But as we look forward to 2022, it’s important to acknowledge the wins.

One that deserves mention is the recognition for greater collaboration. We need to pull together in order to forge a great profession and we see strides being taken on this front, with a joint working group between the AFA and FPA looking at LIF, and a number of associations in working groups with the Law Reform Commission. I look forward to seeing more collaboration on the important reviews occurring in 2022.

On the legislative/regulatory front, we’ve dealt with a flood of new legislation and regulation. The wins, so far, have been small but significant with common sense prevailing re the removal of the need for advisers to do nil reports for DDO, ASIC picking up on feedback to CP 322, and issuing new guides for ROAs and scoping advice.

We also saw a positive shift in the perception of advisers by the public, and in the media, which will continue to improve in 2022. According to Adviser Ratings, trust in financial advice increased from 35 per cent in 2018 to 48 per cent in 2020. This has much to do with the increasing professionalisation of advisers and a recognition by all parties of how well advisers have helped clients through the pandemic. AFCA reported adviser complaints represented only 1.8 per cent of all complaints in the 2020/21 financial year.

It’s also been a time when many advisers became very familiar and efficient with technology and their tech stack. Virtual meetings became the default way to meet with clients during lockdowns and these are likely to continue. However, now that we’re returning to a “new normal”, many of our members have expressed how happy they are to meet with clients again in person, especially new clients.

We’ve been warned that we’ll see COVID-19 variants pop up and we’re already seeing the truth in that. With a well-vaccinated population, we expect the days of long lockdowns are over. However, even if they’re not, we now know that advisers are in a better place to manage their businesses and provide services virtually and that bodes well for them and, importantly, their clients.

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.