Cost of advice top priority for FAAA in 2024

According to FAAA chief executive Sarah Abood, there will be positive and beneficial change to the profession over the next 12 months.

“It is the year when clarity and certainty about the provision of financial advice should be delivered, both to financial advisers and to Australians who can benefit from their advice,” Ms Abood said.

“There has been a lot of discussion about what the future of financial advice should look like. It’s our hope and expectation that this will be the year that details are worked out and meaningful and positive changes will be delivered.

“The FAAA will be focusing on three main areas during 2024 – making it easier and cheaper to provide advice; re-engaging with consumers; and growing the profession.”

According to Ms Abood, FAAA members often lament the difficulty of providing great financial advice, adding that the association will work closely with government, regulators, and other stakeholders to address this issue.

“While it isn’t a new problem for the financial advice profession, it has become an increasing imperative in the past 12 to 24 months,” she said.

“The FAAA has been generally supportive of the package proposed by the federal government in response to the Quality of Advice Review recommendations, but there is still a way to go with important detail still missing in some areas.

“We are calling on government and regulatory bodies to move swiftly to provide the necessary detail, and timelines for consultation and implementation.”

Ms Abood also asked FAAA members to respond to any consultations or submissions quickly so that the association can “develop a unified response on their behalf in a short timeframe”.

“We know there are diverse views amongst our members and it is essential we hear from as many as possible,” she said.

“We continue to engage on a number of other areas which impact on members’ costs of doing business, including the ASIC levy, and the implementation of the Compensation Scheme of Last Resort (CSLR).”

She noted that regulatory intervention isn’t the only factor impacting advice efficiency, highlighting the role of technology in particular.

“Another key area of focus will be the use of technology in financial planning, where substantial opportunities exist to streamline operations and reduce cost,” Ms Abood said.

“We will be including the role of AI, looking at both its ability to assist in the delivery of advice but also its potential to do damage. There are a range of social, ethical, and legal questions that we will be working through with members in this space.”

Value of advice and growing the profession

The FAAA said it is also focused on improving the understanding among all Australians of the value of advice from a qualified, professional financial adviser.

“Research continues to show that people who receive advice are financially better off, and also have improved general wellbeing, compared to those who don’t use a financial adviser,” said Ms Abood.

Unfortunately, she added, many still believe that financial advice is only worthwhile for those that are already “well-off”.

“The reality is that the majority of working Australians, as well as retirees, can benefit from the advice of a registered, qualified financial planner and will receive great value, as the benefits of financial advice far outweigh the cost for average as well as wealthy Australians,” Ms Abood said.

“We have a financial system that’s so complex that the average Australian simply can’t navigate it on their own and will miss many opportunities if they don’t have professional advice.

“In addition, the rise in financial fraud and cyber scams makes it increasingly important that people have the knowledge and tools to avoid these risks and take steps to protect themselves.”

Ms Abood also flagged the large drop in the number of financial advisers in recent years as a continuing concern.

“We need more great advisers, and to achieve that we need to get the message out there that financial planning has a really attractive career path,” she said.

“There is no reason that we can’t reach more than 100,000 financial advisers. There are around 200,000 registered accountants in Australia, and the need for financial advice is just as significant.

“We will be looking at ways to increase the number of students enrolling in financial planning degrees. Financial planning is also a great option for those people looking for a career change, who bring knowledge, experience, and gravitas to the profession.

“In addition, we see opportunities to attract overseas students and professionals to Australia.”

Ms Abood said she hopes that 2024 is the year that more people can say they are proud to be a financial adviser.

“We should be proud of our profession and the work that we do, and we need to get the message out there. It’s time to let more Australians know the value and importance of what we do, and why we do it,” she concluded.