‘Unnecessary complexity’ must be removed to simplify advice process

In a forthcoming chat, ClearView head Simon Swanson shared his views on improvements to the advice sector in 2022 and beyond.

“An important step towards making financial advice more assessable and affordable is to simplify the advice process and remove unnecessary complexity,” Mr Swanson told ifa.

“We support the recommendations contained in the Financial Services Council’s (FSC) recent paper on financial advice, namely removing the safe harbour steps in the best interest duty, replacing lengthy statements of advice with a simpler letter of advice, and amending the code of ethics to enable a principles-based system. The FSC’s recommendations are an important starting point.”

Last month the FSC told ifa it would engage with industry groups within the advice sector after the white paper drew some criticism.

In the paper, the peak body proposed a new framework that could reduce the cost of advice by almost 40 per cent (near $2,000) through recommendations that include abolishing the safe harbour steps for complying with the best interests duty and removing “complex” SoAs in favour of a letter of advice.

KPMG’s analysis of the FSC’s recommendations found that the cost of providing financial advice would be reduced from $5,334 to $3,466, would save advisers up to 32 per cent of time when dealing with clients and allow them to provide advice to an additional 44 new clients each year.

While groups such as the Financial Planning Association of Australia (FPA) and The Advisers Association (TAA) backed the FSC’s recommendations, others including dealer group Synchron and the Association of Independently Owned Financial Professionals (AIOFP) were not as supportive, with AIOFP executive director Peter Johnston slamming the paper as “technically incorrect”, “offensive” and “politically motivated” in an open letter.

Mr Swanson added that the tax deductibility of advice fees would be another improvement in advice affordability as it would reduce the net cost for clients and potentially encourage more people to seek advice.

“ClearView is committed to reaching greater accessibility of advice for all Australians and in particular we welcome Treasury’s upcoming quality of financial advice review,” he said. 

The full piece with Mr Swanson will be published next month.

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.