The Australian Securities and Investments Commission (ASIC) has acknowledged the impact of the mass exodus of advisers from the industry revealed it has hired outside experts to help it decide how to make financial advice more accessible and affordable in the aftermath.
The regulator has told a Parliamentary Committee that it has engaged external consultants to undertake several pieces of research to help it understand key issues related to Access to Advice with the research focusing on:
- What financial decisions Australian consumers are required to make;
- What factors contribute to the cost of personal advice; and
- What types of information an adviser is required to gather and analyse when advising a consumer to switch from a financial product which the consumer holds to a new product.
In doing so, ASIC told the House of Representatives Standing Committee on Financial Services and Economics that “there is evidence of a reduction in the supply of financial advice to Australian consumers”, noting that “as at 25 June 2020, there were approximately 22,200 current financial advisers on the Financial Advisers Register, which is 11% below the long-term average (of 24,930 advisers) prior to 1 January 2019, when much of the Professional Standard Reforms commenced”.
“More advisers may leave the industry as the Professional Standards Reforms are fully implemented. Further, a number of large financial institutions have withdrawn or are proposing to withdraw from the retail financial advice market altogether. Others have scaled-back their retail financial advice businesses,” the ASIC answer said.
“ASIC wants Australian consumers to have access affordable, quality personal financial advice that meets their needs. In light of this, ASIC is currently undertaking a project that is looking at unmet advice needs and how to address them,” the regulator said.
“Specifically, ASIC is examining what impediments industry is facing in providing affordable and scaled advice to consumers. ASIC research shows that consumers want access to scaled and affordable personal advice,” it said.
“ASIC also knows, because industry has repeatedly told us, that it struggles to provide scaled and affordable personal advice. ASIC is focusing on identifying what steps industry and/or ASIC can take to overcome these impediments.”
