The Federal Minister for Financial Services Stephen Jones continues to pursue financial advice reform in a context of significant controversy regarding the best way forward[1].
Unfortunately, the focus seems to be on making advice cheaper by lowering the standards of those providing advice[2]. Is that really the best way to go?
The cost of legal advice would also go down if the government decided to lower the standards of those providing it - perhaps by doing away with the need for law degrees?
Similarly accounting, dental, electrical and all manner of other professional services would be cheaper if delivered by those with fewer qualifications.
Do people want cheap or free advice, or do they want good quality advice? In my experience, people want advice that they can trust.
In an excellent recent article in Professional Planner magazine, author Robert MC Brown has pointed out that achieving client trust through marketing is one thing, but ensuring trustworthiness is another.[3]
He noted the very positive news, announced in October of 2024 by Financial Advice Association of Australia, that according to the latest Value of Advice Index[4], nine out of ten advised clients believe the benefits of financial advice outweigh the costs.[5]
This good news and accords with my experience. But how well-placed is the average client to make that assessment? How do they know if they are receiving quality advice?
It comes down to the ethics of the person providing the advice.
Financial advisers are subject to the mandatory professional ethical standards set out in the Code of Ethics developed by the Financial Adviser Standards and Ethics Authority. The standards are enforceable under the Corporations Act 2001 (Cth)[6].
These ethical standards, including the imperative to avoid conflicts of interest, not just disclose or manage them are vitally important, indeed essential.
They are the key to ensuring the future of a thriving, growing advice profession, serving more and more Australians in the public interest.
Increasing the quantity of advice accessed Australia-wide is best achieved by ensuring its quality.
[1] https://www.ifa.com.au/news/35044-jones-guarantees-broad-support-for-dbfo-amid-reports-of-industry-fractures
[2] Government unveils comprehensive financial advice reform package | Treasury Ministers
[3] https://www.professionalplanner.com.au/2024/11/dbfo-is-well-intentioned-but-misses-the-point
[4] Amid affordability row, clients say advice worth the cost - Professional Planner
[5] Value of Advice Index shows improvement for advised Australians - Financial Advice Association Australia