MenuTIn its pre-Budget submission to the Federal Government, the FAAA has outlined practical measures designed to increase the number of professional financial advisers and cut red tape without compromising consumer protection.
Sarah Abood, CEO of the FAAA, says these steps are essential to ensure Australians are able to access the advice they need to achieve financial wellbeing.
“Our Value of Advice research has shown that professional financial advice is a key driver of not only financial wellbeing, but also peace of mind for consumers. In particular, financial advisers have a critical role to play in supporting people to navigate the largest transfer of intergenerational wealth in history,” she says.
“The challenge is that the ‘advice gap’ has reached a critical point. The number of financial advisers has almost halved in the past seven years (to around 15,000), while the number of Australians needing and wanting financial advice continues to climb. This risks leaving millions of Australians to manage complex financial decisions and financial shocks without the support they need or worse still, turning to unregulated social media, or internet searches for solutions with high risks of permanent capital loss and dependence on social security.
“Growing Australia’s financial advice profession will improve retirement outcomes, financial resilience and long-term well-being. It will also ensure our world-leading superannuation system meets its objective ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’.
“We are calling on the Government to implement these crucial measures as soon as possible,” Abood says.
The FAAA has outlined five key recommendations in its submission:
1. Increase the supply of professional financial advisers across key career points.
2. Provide ATO portal access to professional advisers.
3. Simplify and enhance the tax deductibility of advice.
4. Lower the ASIC levy.
5. Make the CSLR sustainable.
Abood says growing the number of professional advisers is a priority.
“We have been in ongoing discussion with all sides of politics, and across the board there is agreement that we need more professional financial advisers in Australia.
“However action is needed. The decline in the number of advisers has been an issue for some time, and the pipeline of new entrants is nowhere near sufficient to rebuild the profession.
“The FAAA proposes a package of reforms that will help increase the supply of professional financial advisers and ensure we retain talent at key career points (university, mid-career transitions, parental leave etc). Government action is required to clear critical roadblocks that hinder adviser entry into, and retention within, the profession.”
The FAAA’s recommendations to provide ATO portal access and simplify the tax deductibility of advice would help cut red tape and allow advisers to work more efficiently on behalf of their clients, while the ASIC levy and CSLR are increasing cost burdens on the advice profession that both serve to drive up the cost of advice, and discourage more people from entering the profession.
“The FAAA remains supportive of a scheme to compensate the victims of financial misconduct, but the current CSLR is unsustainable and unfair on advisers who have done nothing wrong,” Abood says.
“Collapses such as Dixon Advisory, UFG, Shield and First Guardian, have highlighted the need for more to be done to recover funds from those responsible, including parent and related entities that generated substantial fees from their activities, yet have avoided paying compensation to those harmed. Critically, also, more needs to be done to reduce the prospect of these collapses in the future,” Abood says.