At the Association of Financial Advisers' Conference, a panel of licensee executives agreed that the advice industry will be pushed towards a new model in the coming years.
The panel, facilitated by CoreData founder and principal Andrew Inwood, saw IOOF chief advice officer Darren Whereat, Centrepoint Alliance group executive advice services Kate Anderson and Matrix Planning Solutions chief executive Alison Dummett discuss the biggest issues facing the industry.
High on the agenda was the affordability of financial advice for ordinary Australians, not just the extremely wealthy.
Dummett was asked about the regulatory burden on licensees. She said she wished more of licensee's investment could go towards "making advice more creative" but instead it has to be focussed on compliance.
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Whereat said that the shift in terms of institutional alignment that the industry has experienced in recent years, and particularly since the Royal Commission, might not be helping the affordability problem.
"My feeling is that as an industry the dynamics are changing. We've got the banks out of wealth... We've got two institutions in AMP and IOOF left," he said.
While Whereat acknowledged that the big banks getting out of financial advice was not necessarily a negative for the industry, he said there are advantages to being with a big institution.
"If you want to bring down the cost of advice scale does matter," Whereat said.
IOOF, Whereat said, is putting its money on technology being able to combat this affordability challenge.
He used the example of having clients upload their information to a client portal ahead of a first meeting with a financial adviser, saying some businesses found this could save hundreds of hours of work.
His suggestion is to have different levels of financial advice, at different price points.
"If you want ongoing advice, there's a model for that. If you want a transactional service, there's a model emerging to address that," Whereat said.
Whereat said IOOF recently undertook a large piece of research looking at the experience of 13,000 advised clients and that one thing that was clear from that was that those who had an adviser found value in that advice.
"The reality is, coming out of COVID-19, if not now when?" Whereat said.
"The public does need help. People who get advice live happier, more content lives and they make better decisions."
Later in the discussion, the issue of licensee fees arose.
Inwood said CoreData's research indicates most advisers choosing to be independent are going to the most affordable AFSLs and he was concerned that those advisers wouldn't get the support they need in terms of regulatory compliance.
Anderson agreed that advisers shouldn't be making a decision based on costs alone, they should be looking into licensees and what they really offer.
The other issue facing the industry that the panel broached was the exodus of advisers.
"The reality is as an industry we haven't grown... in terms of the percentage of the population engaging with us it hasn't changed," Whereat said.
Only one in five Australians access advice, he said, and that statistic hasn't changed much in the last 25 years.
"Are we going to face a time where we don't have enough good people coming into the industry?" Inwood asked.
"I do fear that," Dummett said.
Whereat said he thinks the industry will continue to shrink, at least over the next few years.
"We are going through a transformational period as an industry," he said.
There aren't the numbers of people coming through the professional year, Whereat said, to make up for the many that are departing.