The industry’s struggle to identify new talent is likely to continue, but the outflow of advisers has slowed considerably. And there are plans to source talent from other corners, according to the FAAA.
The likely advent of a new class of ‘simple’ advice providers will reshape the industry ecosystem. According to FAAA members, there are four key issues that need addressing before this key reform is implemented.
As part of the strategic partnership, Indian CFP aspirants will have a pathway to gain qualifications that meet the Australian regulatory framework. It’s a bold plan, but one that could help shore up adviser numbers according to the FAAA.
The merged association has added a new core driver to its strategic objectives for the next six years, with growing the profession now a top priority. But the inherent challenges, and past failures, are forcing the FAAA to try new ways of getting more advisers on the books.
While the minister has remained relatively mute on the obvious issues with the CSLR, he will at least allow the association to discuss the scheme’s flaws with Treasury at some point.
There are several bones of contention that the FAAA, and the industry more broadly, has with the compensation scheme’s settings, despite supporting it in principle. At the heart of it is the government’s repeated willingness to foist retrospective punishment on the good for the sins of the bad.
“I was really worried people would say ‘Is that all?'” the minister said, before explaining that he didn’t want to submit key compliance reforms until they were well-designed and collectively agreed upon.
Of the 8,946 practitioner advisers who belonged to either industry group before their April merger, 8,093 have renewed their membership with the merged entity. The FAAA was “very pleased” with the 90 per cent renewal rate, its CEO said, urging stragglers to renew before a grace period ends next month.
The minister was peppered with questions about phases 1 and 2 of the the government’s advice review response, as well as specialist accreditation and data access during a series of events in the sunshine state.
The controversial, long-delayed scheme doesn’t protect consumers from high profile managed investment scheme failures like Sterling and Timbercorp, FAAA CEO Sarah Abood said, and could end up adding another layer of unfair fees at the feet of advisers.
“There’s so much pain, so much division on this one,” FAAA CEO Sarah Abood said of the proposed exemption. “It actually really upsets me, as I know it upsets many members.”
Consumers will be bamboozled by the government’s plan to divide advisers into “experienced” and “relevant” camps, the association explained. That, and the need for a sunset clause, mean the current proposal needs work.
Advisers can practice without a relevant degree for around 30 years according to the draft proposal. They do need a clean record, however – but only up to the end of 2021.
The new association will be branded with its key purpose – providing a unified voice representing advisers – reflected in speech bubbles over the ‘A’s in its name.
Michelle Levy said she was ‘puzzled’ by the government’s decision to conduct a consultation on the proposals handed down in the advice review, while industry leaders urged for the adoption of her reform suite.
After years of declining membership bases and growing frustration with disparate representation, 96.5 per cent of AFA members and 96.7 per cent of FPA members voted in favour of a merger between the two groups.
Levy made no major deviations in her final suite of proposals, with Treasury left to mull on a blueprint for reform that should usher in a less prescriptive, two-tiered advice regime. But there are a few tweaks that might raise eyebrows.
Review leader Michelle Levy said the proposals need to look at the “full universe” of providers. If ‘good advice’ is to replace best interests duty while also opening the gates to product providers, the duties involved will need to fully match the breadth of that task.
CEOs at the soon-to-merge associations say the two groups have become more aligned over the years. AFA members are no longer die-hard ‘riskies’, and the FPA membership base has come a long way from its institutional adviser roots.
Prompted by advice industry rationalisation, the Levy review and the need for a united voice in Canberra, the two major associations will invite members to provide feedback on a proposed merger.
