Would tax-deductible initial advice help the advice gap?
Making initial advice tax-deductible would be a “no brainer” move by the Government to encourage people to seek advice.
Jonathan Wu, executive director and senior financial adviser at SWU Invest, which recently set up an online investing service, said the burden of compliance on firms was not understood by the Government.
Ahead of the election, Wu said he had not yet seen any proposals from the Government or opposition that he felt would improve the financial advice system.
“Compliance is the biggest challenge and it is impacting firms’ bottom line, the number of people leaving the industry is astounding and the Government is not something concrete.
“How can ongoing fees be tax-deductible but not initial fees. It is a no brainer move, it would be such an easy win and encourage people to seek advice.”
He said people were still reluctant to seek advice or failed to appreciate its value and if they held off from seeking advice until retirement, this left them with minimal options to take.
“There’s a portion of people who can’t afford advice and a portion who don’t understand its value. People don’t think they need financial advice until retirement or a life event triggers them to seek advice, it isn’t a life-threatening issue for them, but then they are stuffed as they can’t do much with their superannuation. People are not starting early enough and they could be using things like downsizer contributions.”
He hoped the SWU Online Invest service would help people who were reluctant to seek advice by offering them a managed portfolio.
“There are a lot of people who have generated a lot of cash during the pandemic and they are the demographic that won’t seek advice because they can’t afford it or don’t think it is valuable. They will only likely believe in it when they receive the transfer of wealth from their parents.
“Hopefully our service will be an opportunity for them to get on the front foot and receive guidance.”
AUTHOR
Laura Dew
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.
