QAR positive but not the main game

We are heading into an exciting phase of transformation and growth for the delivery of quality of financial advice to consumers and the recent release of Treasury's Quality of Advice Review (QAR) proposal paper is a positive roadmap forward for the industry.

One example, simplification of the FDS requirements, will make a substantial practical difference to the cost and complexity of delivering advice. There is of course understandable nervousness amongst advisers and licensees around how the overall Proposals work in practice, particularly after years of embedding overly prescriptive rules and regulations.

But for many advisers and licensee businesses, it's not the main game. Most have now embedded the new rules into their operating environments, come to terms with the unreasonable complexity and focused on working out how to run their practice more efficiently. At the same time, they are enjoying significant demand for their services, albeit challenging by finding the staff to keep up with the work.

Advice complexity and consumer access to quality advice will begin to improve in the coming years, with the positive support now being received by the government. But in the meantime, we've all got businesses to run and challenges to work through. The real opportunity is to focus on partnering together to transform the cost and efficiency of advice so advisers (and technology) can serve more consumers. Licensees and service providers are stepping up to help solve some of these issues and partnering with advisers to pursue the opportunity, in an environment of positive change.

Scale creates capacity to invest

The current environment of growth mixed with complexity is leading to consolidation across all participants. This is a good thing. Many advice practices remain small and it is these practices which are mostly impacted by the lack of industry infrastructure to support them. They need scalable service providers to help them run and grow their practices. Historically, it was the larger institutions that provided the infrastructure framework which practices and licensees could plug into. With the departure of most large institutions, its left to the rest of us to invest in this problem.

Mid-tier licensees are building out service platforms

Building scale requires a capacity to invest, and when used to deliver quality services more efficiently, creates a net benefit, one which advisers will only pay for when they see value.

As a service platform, we see the gaps in advice practices and it goes far beyond licensing. Practices require a flexible collection of services so they can ‘plug and play’ to support their value proposition and client base. This is great for advisers, but is also great for the service providers, where licensing remains a challenging cost recovery business model for many.

The industry is already working together on a program of positive change, focused on building a strong profession and services infrastructure that, one day, leads to many more consumers accessing quality advice, whether it be via a human or digital platform. This is the tangible opportunity that sits before the industry today, and one which service providers will have an important role to play to help licensees and advice businesses build the scale to help achieve this goal.

Nathan Jacobsen, CEO, Diverger

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.