|As Australians head to the polls next month, Synchron’s Don Trapnell says one of the key questions advisers need to ask is not just which side of politics will deliver good outcomes for the profession, but also which will deliver for clients.
“We’ve had years of financial services reform, ongoing reviews and inquiries into financial advice, and a never-ending series of complicated changes to advice regulation and legislation,” he said.
“This has been the legacy of both Labor and Coalition federal governments – but what we have today as a result is potentially hundreds of thousands of people missing out on advice because there are not enough advisers to go round or because advice is too expensive, or both. That’s a huge concern.”
Mr Trapnell said there are some fixes that an incoming Government could introduce to turn things around, perhaps even quite quickly, and when going to the polls, advisers could consider how likely, or otherwise, the Liberal National Coalition (the Coalition) or the Australian Labor Party (ALP) might be to implement them.
“First of all, an incoming Government could immediately and formally recognise that commissions are a legitimate and affordable form of remuneration for life insurance advice and commit to leaving well enough alone,” he said.
“We have heard encouraging words to that effect from both sides of politics – including Liberal MP Bert van Manen, and, most recently, Labor’s Stephen Jones. However, both sides say they’ll wait for the Quality of Advice Review and take it from there. That’s not commitment.”
Mr Trapnell also said the Quality of Advice Review follows on from the Life Insurance Framework (LIF). Synchron believes LIF was predicated on a lie.
“The lie was that a culture of churn existed amongst advisers when there was very little evidence of it,” he said. “One side of politics or the other, preferably both, should now publicly support the fact that commissions will help consumers afford life insurance advice.”
Mr Trapnell said another progressive step would be to separate risk advice from financial planning advice.
“At the risk of sounding like a broken record – blind Freddy could see that risk advice is specialist advice centred around protecting wealth with life insurance, while financial planning is a broader approach. As specialists, risk advisers should therefore not be subject to the same broad education requirements as financial planners. After all, mortgage brokers are permitted to specialise in mortgage advice and are not compelled to study financial planning,” he said.
“Which political party will take the blinkers off and recognise this? If they did, many more advisers could stay on in the profession, meaning many more consumers could access affordable life insurance advice.”
Mr Trapnell also noted the current Government’s election promise to continue helping small businesses to create jobs, by supporting those that are investing in skills. The Coalition is investing a further $2.8 billion in the 2022 Budget to support Australian apprenticeships. New apprentices will receive $5,000 payments and businesses that take them on will receive up to $15,000 in wage subsidies.
“This is obviously about building a skilled workforce and providing employment, while also helping to ensure that important services can be supplied to consumers who need them,” Mr Trapnell said.
“That’s all well and good – but will this support be extended to those financial advice businesses that take on new graduates and support them in their Professional Year, so that we can rebuild a workforce to serve the financial advice needs of Australians, a workforce that successive Government ‘reforms’ have decimated? If not, why not?”
Mr Trapnell also has similar questions in relation to election promises from the ALP, including their commitment to, ‘Drive a genuine collaboration with small businesses and government to reduce the time small businesses spend doing taxes, cut paperwork and target support. Eight out of 10 small businesses find government regulation overly complex.’
“We would argue that 10 out of 10 small financial advice businesses find government regulation overly complex, so does this commitment extend to these businesses, and if not, why not? If regulation wasn’t so complex, advice could be delivered much more efficiently, driving down costs and therefore making it more affordable for more consumers.”
These are just some of the questions advisers could carefully consider when going to the polls, Mr Trapnell said. “It’s not just about the future of the profession, it’s also about the financial future of Australians.”