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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.

When Financial Services Minister Stephen Jones presented his Delivering Better Financial Outcomes blueprint, its key plank – the proposal to have a new, less qualified class of adviser deliver “simple” advice – was lambasted for suggesting these intentionally underqualified advisers be called “Qualified Advisers”.

While the proposed naming convention was quickly withdrawn, the broader proposal itself remains as perhaps the most important aspect of the reform suite and promises to do much to increase access to (and affordability of) advice.

To this point, the industry’s reaction has been one of cautious approval. Advisers are well aware that there are far too few of them to service the millions of Australians who need help, but they’re also wary of poorly delivered advice doing damage to consumers and their own, recently patched together, reputation.

The Financial Advice Association of Australia has consistently supported the concept of simple financial advice, with chief executive Sarah Abood (pictured) telling members that agreeance comes with an important caveat: “We’ve been very clear that this proposal needs strong guardrails in order to achieve the goal without endangering consumers and without impacting on the reputation of our profession, which has been hard won,” Abood said during the opening session of the association’s 2024 congress in Brisbane.

While advisers have acknowledged the need for more levels of advice delivery, she explained, “four big issues” were repeatedly raised in feedback from FAAA members.

The first of those issues is the scope with which the new class of advisers operate. While the minister has labelled the new class of advice simple, the industry needs a descriptor that’s more prescriptive. “What do we mean by simple?” Abood said. “How do we ensure that there’s a clear division between what these people could do and the service delivered by a professional financial adviser?”

There’s a few ways the division of advice provision could go. New advisers could be limited to products the client already holds, or a so-called ‘safe list’ of products could be designated “that are harder to get wrong”. There are even suggestions that ‘simple’ advice could relate to the client’s circumstances, with asset level a key indicator.

“There’s several options here, but what’s not negotiable is [that] we need a very clear distinction,” Abood said. “We have high standards. We don’t want our reputation to be harmed if the quality of the advice that’s given by the [new class of adviser] isn’t up to scratch.”

The second concern for advisers revolves around education, and making sure the study that’s completed to enter the new advice cohort matches the duties that are involved. “Even simple advice is not really that simple,” she said.

A further point around education the association highlighted is that the new class of advice should act as a conduit to bring fully-fledged advisers into the ranks. To facilitate this, the FAAA believes, any education new advisers must undertake for the role should also count towards a financial planning degree that’s approved within the professional education framework. Abood called this a “big opportunity” for the industry to replenish the adviser education channel lost when the banks left the advice industry.

The third concern for advisers Abood spoke to was the need for the new class of advice to be open for existing advisers to provide, particularly to the children and grandchildren of existing clients. “This provides a level playing field, enhances competition and it gives consumers more choice,” she said.

The final point Abood noted harks back to what the she called the government’s “ill-chosen” name for the new class of adviser, with the original “Qualified Adviser” moniker being derided by stakeholders who highlighted how confusing, and dangerous, this would be for consumers. FAAA members, she continued, want to put a bright line between the complex advice ASIC-registered advisers provide and the simple advice being proposed.

“The minister has assured us that this will not be the final name,” she said. “Your clear message to us on this has been that you’re strongly opposed to the use of the word ‘planner’ or ‘adviser’ appearing in the title, and this is the position we’ve taken.

“These are controlled terms under legislation,” Abood continued. “They’ve been hard earned and we want to protect them.”