The Association of Independently Owned Financial Professionals’ (AIOFP) annual summit heard an alternative interpretation of current adviser numbers — one that suggests that Australia has enough advisers to meet demand.
Namely, a panel discussion joined by CHOICE CEO Alan Kirkland heard that, according to recent Super Consumers Australia research, only 25 per cent of Australian adults look to the expertise of professionals (e.g. advisers) to assist with retirement planning.
The research, which covered 45 to 80-year-olds, found that while one in four Aussies plan to consult an adviser, as many as a third (37 per cent) are looking to take a DIY approach to plan for retirement, while 38 per cent are disengaged with few assets.
This, according to AIOFP’s Peter Johnston, suggests that if we assume that 25 per cent of Australia’s adult population plans to seek advice at some point or another, we come to a group of some 4.5 million people — a group easily serviceable by our existing advisers.
“Divide that by 15,000 advisers and you have exactly 300 clients per adviser. Advisers can have up to 500 clients and risk-only advisers can have up to 700,” Mr Johnston said.
As such, Mr Johnston said he couldn’t help but question the apparent urgency created by the Quality of Advice Review’s (QAR) lead Michelle Levy regarding the return of non-relevant providers to financial advice.
“The question then must be asked of Ms Levy’s ‘panic and scare tactics’ of claiming the nation does not have enough advisers to meet demand, therefore, justifying the institutions back into advice,” Mr Johnston said.
Last month, while elaborating on her proposal to allow non-relevant providers (not advisers) to provide advice, Ms Levy said: “There are 16,000 financial advisers in Australia, no matter what I recommend, no matter what reforms are made, there will never be enough advisers for everyone to get the advice they need.”
“Advice is episodic, so we need a diversity of providers, and the obvious candidates are the people that look after our money or lend us money,” she added at the time.
However, many have since questioned whether advice was in fact ever supposed to be a commodity for the masses.
It is shameful that the government (admittedly, initiated by the previous one) is considering letting product providers back into providing financial advice.
AIOFP make a good point; there are enough advisers already – no need to lower the standards.
So Michelle Levy is a trained lawyer and clearly has little or no understanding of FASEA Code of ethics Standard 3:
“You must not advise, refer or act in any other matter where you have a conflict of interest or duty”. So, how does that play out with vertically integrated banks and super funds flogging their own products that they clip the ticket?
Yes but industry funds won’t allow advisers to advise their members. I’m not too sure about banks wanting to come back to advice where lending is so much easier and profitable. interest rate hikes already gives them a free lunch. If anything, banks would rather take on credit risk of advice businesses rather than equity risk, as they already do with property.
“Divide that by 15,000 advisers and you have exactly 300 clients per adviser. Advisers can have up to 500 clients and risk-only advisers can have up to 700,” Mr Johnston said.
What? In what world can an adviser efectively service 300 clients?
In Peter Pans world clearly…
Any adviser having 300 clients is not complying with legislation. That number like the AIOFP are living in 1995. As per the comment that only 25% of Australians are seeking advice I can we’ve (the media, a Royal Commission, Advisers, ASIC)) have done an excellent job of ensuring the Australians that actually need advice are sufficiently scared off.
The proposal for non relevant providers is the pre-event for the next Royal Commission.