Advice is more costly, less accessible

Ahead of his session at the Adviser Innovation Summit 2024 (for which Lifespan is a gold partner), Eugene Ardino said advice is becoming more expensive and less accessible, and the rate at which fees are rising has accelerated since the royal commission.

The adviser exodus has exacerbated this issue because having fewer advisers in industry has enabled them to be choosier about which clients they engage with, he added.

“One of the trends shaping the industry has been higher fees and higher bar to entry for clients, meaning fewer clients are able to get advice,” Ardino told ifa.

Recent Investment Trends data showed that 11.8 million Australians had unmet advice needs in 2023 but 1.3 million plan to seek an adviser in the next two years.

According to unadvised Australians and those with unmet advice needs, the barriers to seeking advice include high (41 per cent) or unclear (30 per cent) costs.

“But I’m hoping that once the Quality of Advice Review (QAR) recommendations are implemented, that can reverse some of that cost and allow advisers to be able to engage with clients with capacity to pay lower fees.”

Ardino said he believes that the implementation could arrest annual fee increases and allow advisers to absorb some of the initial cost when onboarding a new client but would have minimal impact on ongoing fees.

“It’s hard to say but I’d say it could reduce the upfront cost to the adviser to some extent, and possibly upfront fees to clients,” he said.

It could also increase the level of transactional or incidental advice, which may not necessarily lead to a long-term relationship between the adviser and client, Ardino suggested.

“But in these cases, the adviser must be able to recover all the hours they spend because otherwise there’s no point to it,” he said.

“If an adviser is confident that they’re going to have a long-term relationship with a client, they might be prepared to absorb some of the costs of bringing on a new client. They can’t do it for a transactional relationship.”

Ardino noted that if the QAR recommendation to simplify and shorten statements of advice and scrap the safe harbour to simplify file notes are implemented, this could allow advisers to spend less time in the back office and more time engaging with clients.

“This should enable advisers to do things for lower fees, especially bring on new clients,” he said.

“There will be some work involved for advisers to adapt to the new rules if the QAR recommendations are implemented but it’s very worthwhile investing the time because in the longer term, it will result in a simplified process.”

Ardino’s comments came ahead of his session at the Adviser Innovation Summit, where he will unpack what a successful business looks like in 2024, and outline trends shaping the advice industry and how advisers could use technology to deliver their services efficiently.

Embedding a technology strategy to increase efficiency and ease the burden of compliance would help advice practices thrive, he said.

“Appoint a technology partner rather than trying to do everything in-house. The more profitable businesses that also enjoy more loyalty from the clients focus on their clients’ needs. They might partner with groups to undertake portfolio management,” Ardino said.

“A thriving business understands what tasks should be done in-house and what requires an external partner. Trying to do everything is difficult, particularly if you’re a single practitioner.”

Speaking about Lifespan Financial Planning’s gold partnership with the Adviser Innovation Summit this year, Ardino said it presents an opportunity to support innovation and meaningful connection and collaboration among the advice community.

“We are keen to share our licensee proposition and demonstrate how we provide advisers with the support and freedom to thrive,” Ardino said

“These events are great for advisers to take time out of their practices and hear from a range of well-respected advice experts, offering innovative ideas and insights into the impact of legislative change, how to position their business for success, leveraging AI and technology and much more.”

To hear more from Eugene Ardino about the trends shaping the advice industry and how advisers can run successful practices, come along to the Adviser Innovation Summit 2024.

It will be held on Tuesday, 4 June at the Telstra Customer Insights Centre, Sydney, and Thursday, 6 June at Zinc at Fed Square, Melbourne.

Click here to buy your tickets and don’t miss out!

For more information, including agenda and speakers, click here.

This summit is produced by Captivate Events. If you need help planning your next event, email director Jim Hall at [email protected]