Sentiment towards advisers has changed but hard work remains

Speaking to ifa in an upcoming podcast, the general manager of transformation at the Financial Advice Association of Australia (FAAA) said that he is more optimistic about the industry than he has been for a long time because of a considerable shift in how advisers are treated by both the mainstream media and politicians.

Mr Anderson explained that with each change – FOFA, LIF, professional standards – and especially after the outcomes of the royal commission, “the mainstream media and the political movement was really very anti-adviser, particularly through 2018 and 2019”.

This negativity, he explained, resulted in a considerable “tumble” in adviser numbers, before a “pushback” was initiated.

“By the end of 2021, both sides of politics were talking about the need to address that, the need to address the declining number of financial advisers, and the need to address the problems that had been created with access and affordability of financial advice. So the momentum has certainly been changing.

“Now I think we’ve got into a much better space where there’s open acceptance of the fact that we don’t have enough advisers and it costs too much to get advice and we’ve made it too difficult to provide advice. So that’s now the, I guess, the political agenda that we live within. And so the momentum has changed.”

Mr Anderson explained that the government’s plans regarding how it intends to fix the mistakes sown by previous legislative changes are fuelling his optimism but noted that a lot of work remains to be done.

“The Quality of Advice Review is probably the strongest one. The AFA and for that matter, the FPA, have been strong supporters of the QAR from the time it was first proposed and the terms of reference, the draft terms of reference were released in December of 2021. Michelle Levy got underway in March of 2022.

“We now have the final report, we now have the minister’s response. I think we have a lot of room to be optimistic, but we shouldn’t underestimate that whilst the support is there, we have to make this really work. We can’t just rest on our laurels and think, ‘Okay, well, the minister has come out to say he supports a range of important elements, including many of what we defined as quick wins’.

“If we are going to move away from the safe harbour, the best interest duty safe harbour, we’ve got to make sure that the alternative is a significantly better alternative.”

The alternative, Mr Anderson added, must allow advisers to efficiently provide advice and for that advice to be assessed in a manner that “trusts” the adviser’s professional judgement.

“When it comes to advice documentation, we got to make sure that all stakeholders are happy, for us to land in a position where whatever documentation is provided is that it is relatively straightforward to prepare, not underestimating the fact that the advice process still needs to be followed, but the actual documentation that’s provided to the client should be five pages, not 50 pages, certainly nothing like the worst-case scenario. But everyone needs to be confident that that will be okay now and it will be okay in the future,” he said.

“We don’t want to have a world where in three years, five years, the regulator or AFCA comes back and has a look and says, ‘No, the advice you provided straight after these reforms’, so let’s say in 2024, ‘is no longer compliant’.”

Mr Anderson stressed the need for advisers to have confidence about the future.

“This last stage of this process is as important as all the work that was done to advocate for change has now got to be implemented effectively.

“But yes, I am confident about the future, but I don’t want to underestimate the amount of work that’s still in front of us to make sure that we maximise these benefits that we can get and that it makes advice more accessible and more affordable.”

To hear more from Mr Anderson, tune in to the podcast from Wednesday.