Regulators must put 'more trust' in advice industry

On a new episode of the ifa Show podcast, adviser and founder of digital solution Scientiam, Nigel Baker, said the "shake-up" of the industry has called for a new regulatory framework; one that supports and emboldens advisers.

"It would be great to have a future of the industry where there's more trust, I suppose," Mr Baker said.

"The regulators trust the industry and say: 'You've got to be able to help more people. Some people don't need full advice and some people do and we're going to trust the advisory industry to better work that out.' Just like, if you're a doctor, you can say: 'You've got a headache, go back to the chemist.'

"Where as at the moment, it's like, someone comes in the office and they need a 40-page statement of advice and that's just not practical. That's obviously led to some problems we're seeing in the industry now."

To own that conversation with regulators, Mr Baker said advisers should engage with local politicians on their concerns, share their stories with others in the industry and work together.

Aside from this, the Scientiam head said advisers should also consider changing up how they engage with clients.

"It's not about product, it's just about giving people information to make better financial decisions," Mr Baker said.

"That can be as simple as how to save for a mortgage, or how to repay your debt faster. At the moment, people get scared about having even those conversations, because they're scared about: 'Well, is that advice? Do I have to document it? Do I have to give a statement of advice now? 'All those sorts of things.

"So, I think the more and more advisers can talk to politicians, get out there, work together, and I think then we'll be able to help transform the industry going forward."

Listen to the full episode with Mr Baker here.

It comes after the Association of Financial Advisers (AFA) CEO Phil Anderson said that the QAR must look at the "significant layers of bureaucracy" forced on the advice sector in recent years.

On the recent episode of the ifa Show, Mr Anderson said it doesn't surprise him that many of the QAR submissions issued to Treasury have recommended the regulatory burden placed on planners be reviewed.

"When you think about it, we've had such a period of vigorous, almost constant regulatory reform that is just built over the top of each other," Mr Anderson said.

"So we've had the FOFA reforms, we've had the LIF reforms, we've had professional standards. We've had all the recommendations out of the Royal Commission. On top of that, you've had DDO and a range of other reforms. It's all just one layer on top of the other layer."

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.