New class of advisers ‘an opportunity’ for the profession

Since the initial announcement that the government is likely to introduce a new class of advisers, many have been concerned about the impact it could have on the advice profession.

On a recent episode of The ifa Show, Ben Marshan, director of Marshan Consulting, argued that advisers need not worry about the proposed new class of advisers and instead see it as an opportunity.

With tranche two of the Delivering Better Financial Outcomes (DBFO) reforms expected to introduce the new advisers, Marshan noted that the biggest question is whether they will be restricted to super funds or if advice firms will be able to take advantage of the opportunity.

“There’s a question about whether or not the new class of adviser … is tied to being a superannuation trustee because of the additional trustee obligations that sit there, or whether or not this argument that it should broadly apply to any financial services provider makes more sense,” he said.

“If the latter happens, then, yeah, I think there’s an opportunity … for practices or licensees to be thinking about how they take advantage of that particular new class of adviser within their advice business to answer their clients’ questions, be able to provide them advice on simple topics.”

He explained that these new advisers will be well positioned to manage basic questions from clients “in a much more cost-effective manner that I think everybody should be taking advantage of if they can”, leaving professional advisers to manage more profitable tasks.

Marshan encouraged advisers to focus on the potential benefits of the new class of advisers rather than viewing them as a threat, as they are unlikely to negatively impact their businesses.

“Ignore the name, ignore the education requirements, ignore what the competency standards are; how do I create a really efficient, engaging advice practice by having somebody in this new class of adviser role in my business? I’d be thinking about it. I’d definitely be thinking about it, but I wouldn’t worry,” he said.

“I wouldn’t worry about all the noise and the rubbish that’s kind of sitting around it, because people want financial advice from a professional. All the research says that. And getting hung up on what happens in this space, it’s not going to affect you, it’s not going to affect your business.

“It’s only going to help people get more advice and therefore graduate up to needing a full planner. Or it’s more people in your business that can help more Australians, more of your clients with putting themselves in the right financial position. I would encourage you to relax about it and think about what are the benefits of it.”

One barrier that is standing in the way of advice firms utilising these proposed new class of adviser is that, as things stand, they are not allowed to charge for their services.

Speaking at a media roundtable in June, Financial Advice Association Australia chief executive Sarah Abood said members have raised concerns that it would not be possible for them to employ a limited adviser and not charge clients.

“There aren’t very many practices that are big enough, with big enough margins, to be able to offer that service entirely for free,” Abood said.

“It has been an advocacy point for us in the current round of consultations that there should be no restrictions on charging.”

She argued that not only should this be allowed, it also would not be a “level playing field” without the ability to charge.

“If small firms aren’t allowed to charge for it, they can’t do it. And then that would effectively restrict this option only to large financial institutions,” Abood said.

To hear more from Ben Marshan, tune in here.