“broken”, as some of the major financial experts agreed that professional financial advice has been pushed out of reach for most Australians, as a result of over-regulation. Figures published by researcher Adviser Ratings, the median fee for financial advice in the Pacific nation reached $3256 per client last year, a 16 per cent increase from a year ago. Meanwhile, the average cost to provide this advice is estimated by KPMG at $5335, making it a loss-making enterprise.
Consumer advocate Jeff Morris is of the view that the Australian Securities and Investments Commission (ASIC) should take some blame for this, claiming that the regulator has “feet of clay”. Speaking during the summit last week, the former financial planner whose disclosure of misconduct sparked the banking royal commission, said: “The bureaucrats have designed a system that in practice is cumbersome and adds cost. They’ve over-egged the pudding and the commercial feasibility of what they impose doesn’t factor into what they’ve done.”
However, Morris rejected the view that the matter should be addressed by relaxing the regulatory burden in the financial planning industry. Instead, he suggested that the ASIC focus on increasing reliance on software to support efforts to provide advice to regular consumers.
According to the Commonwealth Bank (CBA) whistleblower, while the financial advice industry has upskilled over the recent years, particularly as a result of the code of ethics and the controversial mandatory education reforms initiated by the Prime Minister Scott Morrison’s administration, so-called robo-adviser would be ideal solution for some of the shortcomings in the sector.
“The trouble is there is still the scope for human greed. I’ve seen people give very dangerous off-the-cuff advice,” Morris noted. “The beauty of robo-advice is you can program all sorts of safeguards into it. For the vast majority of people that would be the way to cover the vast majority of their needs.”
