The Association of Financial Advisers and Financial Planning Association of Australia have appeared before the House of Representatives Standing Committee on Economics, sharing austere views of the financial advice industry.
AFA general manager, policy and professionalism Phil Anderson said that the ASIC Financial Adviser Register had dropped by 6000 advisers in the last 18 months.
Liberal MP Craig Kelly brought up the drop in financial adviser number again - pointing out the decline represents about 20% of the industry leaving.
"There are very few new advisers coming into the industry," Anderson said.
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AFA chief executive Phil Kewin added that recent Investment Trends research had found that fewer Australians are accessing financial advice, the logical end result of a smaller industry.
The cost of providing financial advice for advisers and the reduction in access and affordability of financial advice for Australian consumers was a focus for both associations during the hearing.
Liberal MP Jason Falinski asked whether "dumb" legislation had resulted in financial advisers being unable to service clients with less than a $1 million in investable assets without making a loss, a claim he said he had heard from constituents.
AFA board member and treasurer Sam Perera said that yes, most of the high cost of providing financial advice comes from the compliance burden.
"You can surmise that there is dumb regulation, to use your term, or duplication within the system that increases the cost of advice that is eventually borne by the consumer," Perera said.
Anderson pointed out that among the three main bodies that regulate financial advice - ASIC, FASEA and the Tax Practitioners Board - there is duplication in compliance requirements.
The associations also faced questioning on the FASEA exam and the participation rate.Following that, Labor MP Daniel Molino referred to the FASEA exam as "basic", saying that it concerns him that only 7000 financial advisers out of 23,000 had completed the exam recently - and about 1000 of those had not passed.
He defined the Royal Commission reforms as getting financial advisers over "basic" hurdles of professionalism.
De Gori pointed out the exam was delayed by six months and for at least a further six months it was not available in regional areas. He added that amid COVID-19 advisers were busier than ever and FASEA took time to move the exam online.
Anderson disagreed with Molino, saying the FASEA exam is not "basic" but actually covers a substantial amount of material and is challenging.