5 years of the Hayne RC: 5 advisers reflect on industry progress
Five years since the Hayne royal commission concluded in 2019, Money Management speaks to five advisers who reflect on how the advice industry has been “changed forever”.
On 14 December 2017, the landmark Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established. Over one year later, it concluded on 4 February 2019 when the final report was publicly handed down by Commissioner Kenneth Hayne.
Its principal objective was to “restore trust in Australia’s financial system”, following unearthed cases of misconduct, fraud and “fees for no service” scandals in the banking system.
“From today, the sector must change, and change forever,” stated former treasurer Josh Frydenberg in the final report.
During the intervening five years, the advice profession has dramatically fallen from its peak of approximately 28,000 advisers in 2018 to just over 15,660 currently – often referred to as the “adviser exodus”.
Five years since the significant period of upheaval, adviser exits and regulatory overhaul, Money Management speaks with five advisers to hear their perspectives on the state of advice now.
Robert Rich, director and financial adviser at Unite Wealth
Rich reflected: “The royal commission was a must-watch viewing, I could write a thesis on it. In broad terms, it’s been fantastic – absolutely the best thing for the industry and the profession.”
In addition to the increased regulation, the director said the RC forced out advisers who either “weren’t taking the role seriously” or “weren’t in it for the right reasons”.
Instead, a new breed of advisers have recognised the value of higher education standards and ensure their advice is in the client’s best interest.
“[The RC] has given me a lot of confidence in my career choice, that I’m on the right path and that I should be running my own business. I’m sure it’s given the Australian population a lot more confidence as well, where they know they can trust us. They know they’re coming to advisers that don’t have any ties to any banks, any products,” Rich commented.
Dawn Thomas, senior wealth adviser at The Wealth Designers
As a bank adviser during the RC, Thomas described it as a “lonely journey” when the public was being flooded with negative coverage of the advice sector.
“We had pride in what we were doing and we knew the benefits for clients, but if you went out and mentioned that you either worked for the banks or were a financial adviser, you’d get very broad comments about people not having ethics, which didn’t really pertain to how you are,” she told Money Management.
While Thomas recognised the myriad of positive outcomes following the RC, she believes the intention of the RC is still missing today.
“We’ve come a long way in working towards becoming a profession, but one of the hallmarks of a profession is that you need to be recognised by the public as such. I don’t think we have that yet. We’ve lifted standards, we’ve changed the way we’re doing advice in a more consistent manner, but I don’t think necessarily we have achieved widespread recognition from the public.”
Nathan Fradley, senior adviser at Tribeca Financial
For Fradley and others alike, the RC was filled with shame for being an adviser during that time.
“I think advisers around that royal commission time were being shamed for being advisers. There was quite a bit of ‘I feel like I’m a bad person, I’ve been doing this work trying to help people and I feel like I’ve not been doing the right thing’. It definitely beat my confidence a bit.
“Since then, [it’s been about] reaffirming that I know what I’m doing, I’m always above the minimum standards. Clients love what we do – that’s the important thing to remind ourselves of. But that confidence piece really took a while to get back.
The senior adviser describes his confidence now as at an “all-time high” currently, and remains focused on helping attract the “next frontier” of new entrants into the advice industry.
“The advisers who stayed have really doubled down on what they are doing and now we face the opportunity and challenge to bring more entrants into the industry – that’s the next frontier.
Natallia Smith, founder and principal adviser at TruWealth Advice
Smith described the move towards greater fee disclosure and transparency regarding affiliations as a “positive step” for independence.
“There’s now greater transparency, that’s something that we’ve always done. It was just the next level of disclosing fees and really being transparent with the clients when it comes to any improper affiliations or anything like that. For me, it was a positive step towards that independence.
She added: “There are also a lot of newer advisers who have come to the scene, where it’s not just focused on the traditional ways of being a technical expert. Now it’s all about actually having the soft skills, having empathy, understanding the mindset and behaviour of a client. I feel like that is really changing, and it’s great.”
Dylan Pargiter-Green, director and adviser at Bold Wealth
Also speaking with Money Management, Pargiter-Green noted the rhetoric of greater trust in the future of advice, from consumers and advisers alike.
“I was always of the opinion that having a royal commission is generally a difficult thing to go through, but rarely does it lead to a negative outcome. A lot of the people who had been riding the wave of product advice and easy transactional advice are no longer considered advisers. That creates confidence in someone who’s potentially seeking financial advice for the first time.
“Having higher training education standards creates a better environment for higher quality outcomes for the consumer and our clients. If you’ve got a higher skilled workforce, you’re going to have a higher likelihood of value generation. Overall, the new education standards are a fantastic thing.”
Five years later, the director believes financial advice as a profession is in a much better position than it was pre-royal commission.
AUTHOR
Jasmine Siljic
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From my accountants point of view this was entirely unneccessary, increased complexity, increased fees, more grey and put more road blocks up to provide advise.
Doing FAESA 3 times, it had a bad effect on my business with a ll the changes from COVID and ATO audit activity.
This was allways a political issue with the Liberal party running away from the union investigation.
The bank have been an easy target ever since and the govt is doing its best to drive them out of business and this has peculated down to all businesses.
Such a high personal cost to so many. It must be acknowledged with rather more sensitivity. It is a good thing Mr Rich has a queue of well-credentialed young recruits willing to join a heavily regulated industry. It will be some time before the loss of so many advisers can be redressed. Productivity? Not likely. Now excuse me while I send a document back to the client to be dated.
I’ve been an adviser for 34 years and while I passed the FASEA exam first attempt, I felt that it failed to test technical competency enough.
The post Royal Commission reforms were positive and while the lift in education standards are welcome, the experience and continuing education knowledge bank quite rightly deserved recognition. The experience pathway is a reasonable outcome.
Overall I feel that the financial Planning is in better shape as a profession than at any time in my 34 years service.
I do hope that the limited scope of product advice that will be handed out by super funds is appropriately branded as such.
The RC highlighted the way the big vertically integrated end of town operated in an unethical manner (and I felt sick to my stomach watching it live) and cleaned out those who weren't acting in the clients best interests. The upshot though has been a bureaucratic overlay of rules, regulations and unending paperwork & increased cost that unsurprisingly the QAR wants rolled back completely. The damage done to some advisers health, business, revenue & their clients cannot be understated. The responses in this article are "sugar coated" and don't reflect this reality. It is now harder than ever to run a financial advice business in a profitable and productive manner