The increasing cost of delivering financial advice coupled with lack of guidance and strategy documents are the major barriers to limited advice, according to licensees.
The Australian Securities and Investments Commission's (ASIC) latest consultation paper, Promoting access to affordable advice for consumers, is giving not only advisers but also licensees the chance to voice their opinions on the issues relating to the supply of good quality affordable advice and what steps can be taken for consumers to access it.
Where limited advice is provided, ASIC wants to know what topics are typically covered, the kind of arrangement such advice is provided under, the barriers to doing so and the limited advice services the licensee would like to provide in future.
ClearView Financial Advice and Matrix Planning Solutions chief executive Allison Dummett has embraced ASIC's consultation paper saying it is "hugely positive" that the regulator is asking for feedback, not only for the 20,000 clients under the licence but also the industry.
However, she said the regulator should provide more guidance for advisers and licensees.
"The guidance could be updated to be more current more practical and particularly incorporating things such as FASEA obligations," she said.
What makes advisers and licensees cautious, she said, is that scaled advice is open to interpretation under FASEA and ASIC's own regulation and can be reinterpreted by the Australian Financial Complaints Authority.
"But any guidance that would give an adviser and the licensee more confidence that they can speak freely in a statement of advice, record of advice or a document, that's actually a separate issue," Dummett added.
Lifespan chief executive Eugene Ardino agreed: "If you want to increase accessibility you need a way to give advisers confidence that they can meet their legal obligation and still be able to arrive at the limited scope advice in a much simpler manner."
It is not just the legal obligations that are complex for advisers, he said, but the ongoing costs involved with being an adviser and the amount of time that goes into delivering limited advice.
"It is not a short space of time for an adviser to collect all the data, analyse it, investigate a range of other strategies, formulate the advice and compile the statement of advice."
Centrepoint Alliance head of licensee standards Nicole Alexander, along with Dummett and Ardino, noted the most advised topics are retirement planning, superannuation and personal insurance.
However, Alexander agrees with Ardino believing scaled or limited advice, particularly in these topics, is not a different "type" of advice but rather it is simply that the level of complexity and time to deliver that advice that is different.
She acknowledged the increasing cost of advice but said ASIC needs to take a step back and recognise the factors that are going into that cost.
She asked: "What is it that advisers are needing to do or spending their time on? How are clients able to engage with those advisers and what is limiting them from getting advice, what is slowing down the advice process?"
The industry, she said, is built on personal advice and the process of giving a Statement of Advice and building a relationship with the client but the demand is in scaled or limited advice.
"The demand is from consumers who need it to be more accessible and affordable whereas high net worth clients perhaps already have access to comprehensive advice," she said.
Alexander believes a way for ASIC to support advisers in mitigating these issues echo those of the Financial Services Council (FSC): introducing an entry level type of advice and strategic advice.
The FSC launched a report by Rice Warner, Future of Advice, that proposes all advice should fall under one of two categories - strategic advice and financial product advice.
Strategic advice is used to help an individual control their finances and set a financial plan with generic products whereas financial product advice would be required to implement any strategic advice but could be provided without it.
Simple personal advice is advice that deals with superannuation, life insurance, debt and budgeting and whereas complex personal advice specifically includes more complex and or risky products or topics.
Alexander said strategic advice, is one area that ASIC could give more support to advisers and how to deliver it.
"Even things like factual information and general advice has a greater role to play in improving the financial literacy of consumers and their access to advice, even if it is entry level and answering a simple question with simple advice and moving then more into that personal space," she said.
While ASIC is asking licensees that do not allow their advisers to provide limited advice the reasons why, Dummett, Alexander and Ardino are all in support of advisers under their respective licences providing it.