FAAA outlines priorities and expectations for 2024
2024 will be a watershed year for financial advice in Australia, and the FAAA expects to see positive and beneficial change to the profession over the next 12 months, says Sarah Abood, CEO of the Financial Advice Association Australia (FAAA).
“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.
“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,” Ms Abood says.
1. Making it easier and cheaper to provide advice
Ms Abood says that a common refrain from members is that “it shouldn’t be this hard to provide great financial advice”, and the FAAA will be working 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 says.
“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.
“We will be asking all our members to respond quickly, and in numbers, to any consultations or submissions, so we 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 says.
“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).
“Another key area of focus will be the use of technology in financial planning, where substantial opportunities exist to streamline operations and reduce cost. 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.”
2. Re-engaging with consumers
The second area of focus for the FAAA in 2024 will be to improve understanding amongst 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,” says Ms Abood.
“It is encouraging that research by the Governance Institute of Australia shows that perceptions of the ethics of financial planners continues to improve, according to its latest Ethics Index 2023 (2023: 21 compared to 2022: 16). Financial advisers are now more trusted than many occupations – including for example, lawyers and CEOs (which both ranked 9 in 2023).
“However there is still a perception that financial advice is only for the 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.
“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.
3. Growing the profession
Ms Abood says the fall in the number of financial advisers in recent years remains a big 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. 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 says 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 says.