‘Unnecessary complexity’ must be removed to simplify advice process
The managing director of a financial services company says the key to making advice more affordable for Australians is to remove the complexity within the process.
In a forthcoming chat, ClearView head Simon Swanson shared his views on improvements to the advice sector in 2022 and beyond.
“An important step towards making financial advice more assessable and affordable is to simplify the advice process and remove unnecessary complexity,” Mr Swanson told ifa.
“We support the recommendations contained in the Financial Services Council’s (FSC) recent paper on financial advice, namely removing the safe harbour steps in the best interest duty, replacing lengthy statements of advice with a simpler letter of advice, and amending the code of ethics to enable a principles-based system. The FSC’s recommendations are an important starting point.”
Last month the FSC told ifa it would engage with industry groups within the advice sector after the white paper drew some criticism.
In the paper, the peak body proposed a new framework that could reduce the cost of advice by almost 40 per cent (near $2,000) through recommendations that include abolishing the safe harbour steps for complying with the best interests duty and removing “complex” SoAs in favour of a letter of advice.
KPMG’s analysis of the FSC’s recommendations found that the cost of providing financial advice would be reduced from $5,334 to $3,466, would save advisers up to 32 per cent of time when dealing with clients and allow them to provide advice to an additional 44 new clients each year.
While groups such as the Financial Planning Association of Australia (FPA) and The Advisers Association (TAA) backed the FSC’s recommendations, others including dealer group Synchron and the Association of Independently Owned Financial Professionals (AIOFP) were not as supportive, with AIOFP executive director Peter Johnston slamming the paper as “technically incorrect”, “offensive” and “politically motivated” in an open letter.
Mr Swanson added that the tax deductibility of advice fees would be another improvement in advice affordability as it would reduce the net cost for clients and potentially encourage more people to seek advice.
“ClearView is committed to reaching greater accessibility of advice for all Australians and in particular we welcome Treasury’s upcoming quality of financial advice review,” he said.
The full piece with Mr Swanson will be published next month.
Tony Zhang
Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.
Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.
