Key Points: 

  • Recommendations in the Quality of Advice Review aim to make financial advice more accessible and affordable
  • The report recommends removing the need for lengthy statement of advice statements and making providers of personal advice subject to a 'good advice duty'
  • The government will now undertake consultations on the review

 

Read more about the Quality of Advice review here. 

Transcript: 

Mark Lamonica: It's a good question and a timely question. So, the question is – The government is going through a comprehensive quality of advice review, with the final report having just been issued. What does this mean for investors?

So, great question. And first, we need to go back and look at history a little bit and the history of financial advice in Australia. So, since the Royal Commission, we've seen two things happen – more regulations came out and also the number of advisors has dropped significantly as the standards have gone up for who can give advice. Just in the last financial year, the cost of ongoing advice has gone up 33%, so it's close to $5,000 a year now. So, naturally, what this has meant is less Australians are able to access financial advice, and that's really what this proposal is trying to address.

And we don't obviously know any of the details yet. So, it hasn't passed Parliament. There could still be changes, and then we'll have to see how the industry responds. But really, what the intention of this is, outside of that full service financial advice there are more opportunities to provide advice, so either providing that through technology or providing it still from humans but in a less comprehensive way, so really, this notion of scaled advice. So, we'll see what happens, but there's a couple of different things to think about as an investor.

The first thing to think about is what type of financial advice do you need. They certainly differ between people that are in different situations, and then you can assess what the different options are, which are sure to follow if this passes Parliament. The other thing really to think about is your own responsibility in this, and that's your own financial literacy. What I would say for most investors is to take the time to continue to learn more, and that doesn't necessarily mean going in there and learning how to pick your own shares to go in your portfolio. It's really just understanding the math behind how financial planning works. So, what is the relationship between saving and time and the amount you save and how that's going to impact the financial outcome that you actually receive. So, obviously, we'll be monitoring what happens as this proposal works its way through Parliament and then as the industry responds. But for now, focus on what sort of help you need and focus on your own financial literacy.