Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Insignia’s Mota: Advice review to ‘start opening doors’ for the industry
The suite of proposals in the Quality of Advice review, if adopted, make up just one of the factors that will see the financial advice industry undertake the “quantum shift” it requires to go from servicing two million to four or five million Australians, according to Renato Mota, chief executive at Insignia Financial.
Speaking on a fireside panel with Insignia’s head of wealth Darren Whereat, Mota said review lead Michelle Levy should be “applauded” for putting together a reform package that would achieve its objective – to improve access and affordability in advice.
“The report has created a fantastic opportunity for us to create real structural change at an inflection point in the industry,” Mota (pictured) said, while adding that the consultation into the proposals instigated by financial services minister Stephen Jones was a “really important” step in ensuring the changes don’t invite unintended consequences.
But 16,000 advisers providing holistic, full service advice won’t move the needle in terms of access or affordability, head of advice Whereat said. What’s needed is more scope for “coaching” and “transactional” advice, which the Levy reforms do accommodate.
“It’s hard not to recognize that there are many millions of people that are outside the system that might need a different type of help,” Whereat explained. “And that might be transactional advice, it might be interfund advice, it might be coaching, it might be budgeting, it could be a number of things that are probably much earlier in the journey, the final to financial freedom.
It’s all part of what Mota believes is the evolution of financial advice, which Insignia, as the market’s leading provider, is keen to lay claim to. Advice is on the cusp of spreading its wings beyond comprehensive advice, which presents a huge unknown for the industry.
“Think a little differently, around advice as a continuum of support and and services, rather than just one holistic model, which is the way I’d reflect on the model today [which] I think is very comprehensive,” Mota said. “It’s very professional and it’s quality is higher than it’s ever been. However, it’s only a holistic model and we haven’t yet discovered a great way to make it a continuum of support. And I think that’s where the opportunity lies.”
Along with technology, the regulatory settings being reshaped in the Levy proposal will be a key pillar in the quantum shift Mota said the industry needs in order to service more of the burgeoning retirement cohort.
“They’re some of the ideas that will support that quantum shift,” he said. “Levy’s review… I think has embedded in it some ideas that do start opening doors.”
