Quality financial advice more of a challenge then ever

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MEDIA RELEASE: With financial adviser numbers falling in the wake of the Royal Commission, the risk is that many Australians will miss out on financial advice, says Michael Hutton, head of wealth management at HLB Mann Judd.

“It’s both the best of times and the worst of times for financial advisers,” he says.

“The events of the past few years mean that financial planners will need to work even harder to ensure Australians don’t miss out on the advice and assistance they need.

“Many advisers are leaving the industry, for various reasons including education pressures, compliance burdens heightened by the Hayne Royal Commission, and the big banks closing down their financial advice arms in order to mitigate risk.

“As a result, we are seeing extensive fragmentation of the financial advice industry, with many advisers seeking new licensees or getting their own licence.

“The industry is in a state of flux and for those of us who remain, the transition is not an easy one.

“The silver lining to this is that, with fewer advisers around, those that embrace the new regime and do it well are likely to experience increased demand and see their practices grow.”

However Mr Hutton says that the most serious issue is that, as a result of the change and the fall in adviser numbers, many Australians are likely to miss out on financial advice.

“The most unfortunate outcome of all this is that people will find it more difficult to get personalised financial advice.

“The cost of providing advice is rising, making it challenging for advisers to run viable businesses unless they pass some of this cost on to clients.

“Meanwhile, the complexity of the financial environment, including tax and superannuation rules, is also increasing, making it more necessary than ever for people to get professional help to ensure they fully understand their situation and make the most of it.

“Good financial advice covers a wide range of wealth issues – super, other investments, interaction with tax, estate planning, cashflow planning, insurance needs, debt management, retirement plans, interaction with Centrelink benefits and so on.

“While almost everyone has a banking relationship, they will no longer be able to talk to their banks for advice.  Likewise, while superannuation funds are likely to be called upon to provide advice, this is likely to be general in nature, not specific, and limited to the superannuation side of a person’s wealth.

“And while there has been talk in recent years about the use of technology, and the rise of robo-advice, I don’t believe that technology can fill the gap.  Financial advice requires empathy, understanding and intuition, which technology – no matter how intelligent – can’t provide.

“The challenge for advisers is to find a way to repair the trust that has been damaged following the Royal Commission and show Australians the value of the advice they provide,” Mr Hutton said.