Financial advice: Accessibility for all or reserved for a privileged few?

In the ongoing debate over financial advice accessibility in Australia, two opposing views have emerged. Some contend that not all Australians should have access to financial advice, as it should remain a valuable commodity reserved for a privileged few. On the other hand, others argue that every Australian should have access to financial advice, to help secure a better future for themselves and their families.

Earlier this year, Adviser Ratings revealed that since 2019, 11,000 advisers moved to new licensees, as several bank licensees crumbled, while more than 12,000 advisers exited.

The firm has previously predicted industry numbers would settle around the 13,000 mark at the end of 2025.

The departure of banks from the financial advice sector has arguably severed the channel through which aspiring advisers traditionally entered the industry.

However, with potential new regulations coming into play and a general slowing of adviser exits, the industry is hopeful that numbers will gradually start to recover.

Helen Baker, a licensed Australian financial adviser and author, belongs to the camp that believes the number of advisers needs to increase in order for their invaluable work to reach more Australians.

Speaking to ifa, Ms Baker emphasised that the industry should prioritise the restoration of its reputation as a means to attract new entrants.

“The associations maybe haven’t been strong in communicating what we are. Every time there is a bad news story, who is stepping up to say we are great at what we do and that’s an absolute minority?” Ms Baker said.

“We need strong and bold communication out to the public to demonstrate how we’ve added value to people, how they’re in much better positions.”

Ms Baker also suggested advisers need to take a more active approach towards representing their industry in schools and the wider community.

A similar idea was previously floated by Dr Katherine Hunt, a financial adviser and researcher at Griffith Business School, who in conversation with ifa earlier this year, stressed that advisers looking to attract new entrants need to be a lot more proactive.

“If financial planners wanted more entrants, they would be at every single school. They have this little day where all the professions show up and the financial planners are not there,” Dr Hunt said at the time.

Late last year, chief executive of Lifespan Financial Planning, Eugene Ardino, predicted that attracting new entrants into the financial advice industry will continue to be a challenge in 2023 and beyond.

Also talking to ifa at the time, Mr Ardino said that “with the mass exodus of advisers from the profession over the last four years, it has never been more important to try to attract new entrants and to have the infrastructure in place to work with them”.

“This has been a real challenge for the profession with all the legislative change combined with difficult market and economic conditions, but hopefully we see some easing from a legislative change point of view in the short term,” he said.

However, there are those who argue that Australia already boasts an ample number of financial advisers and does not require further additions to its ranks.

Namely, a recent comment received by ifa reads: “There are 16,000 licensed financial advisers in the country, so the numbers don’t square. I’m surprised no one has challenged this falsehood. It keeps getting repeated like it is a fact. If we were allowed to operate like other professionals, there is no reason why a financial adviser couldn’t meet with three clients a day, four days per week. For 16,000 financial planners, working 46 weeks per year, that’s 9 million client appointments every year. Many of them would be couples, so in theory, we could provide an annual review to around 13 million Australians. Of course, not all Australians want or need financial advice, and many don’t need an annual review. I would argue we have a potential oversupply of financial advisers considering our population size. The problem is red tape and compliance, not the supply.”

Previously, the Association of Independently Owned Financial Professionals (AIOFP) presented a similar interpretation of current adviser numbers — one that suggests that Australia has enough advisers to meet demand.

Namely, using Super Consumers Australia research, AIOFP suggested that 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.

Could the argument that financial advice is accessible only to those who can afford it hold some truth?

The notion being that if you have the financial means, you can readily obtain it, whereas if you lack the necessary resources, you’re out of luck.

Or should all Australians have the opportunity to receive guidance on crucial matters such as retirement planning? Should superannuation funds be permitted to provide limited advice in order to fulfil this need?

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