Our special guest for the first Finsider this year is Sarah Abood. Chief executive officer of the Financial Advice Association Australia (FAAA), Sarah has over 25 years’ experience in the financial services industry. Prior to commencing as FAAA's CEO, Sarah was chief operating officer at Hope Housing FundsManagement. Before this she spent nine years as CEO of Profile Financial Services, a privately-owned and self-licensed financial planning firm where she gained an understanding of the demands of the financial planning profession and its practice. Sarah has also worked in senior change and transformation, and marketing roles for some of Australia’s leading financial institutions. Sarah holds a BA from the University of Sydney, an MBA from Macquarie University (MGSM) and is a Graduate of the Australian Institute of Company Directors.
There were certainly plenty of changes in 2023, but many were anticipated. Some that weren’t:
- The inclusion of insurers and banks in the ranks of organisations that will be able to provide simple advice using “non-relevant providers” came as a surprise to many. In the government’s initial response to the Quality of Advice Review proposals, this was flagged as being restricted initially to super funds. The other surprise in this final response by government, was the proposed name for this class of advice providers –“qualified advisers”. Given the strong focus on the education standards for financial advisers, many felt this to be a misnomer and liable to greatly confuse clients, and we’re certainly hopeful that this term will change.
- The big hike in the ASIC levy for the last financial year was a very unwelcome surprise. At a time when we are all working hard to reduce financial advice costs, the scale of the increase after some years of being frozen was both surprising and concerning.
- We’re seeing an increased focus on superannuation from the government. While many proposed changes had been previously signalled, some were left-field, such as the proposal to increase the tax rate on super balances above $3m.
- The Government’s introduction of a new breach reporting regime and dobbing requirement for tax and BAS agents (similar to the financial adviser model) was particularly surprising, with a notable lack of consultation on changes that will be very significant for the accounting profession in particular.
- Welcome surprises included the resilience of stock markets, house prices and employment, despite the tightening interest rate cycle and many global tensions.
There are many, but regulation has dominated the world of financial advice for some time and that is clearly not going away any time soon. The rules will keep changing, we can be sure of that, and we need to find ways to operate effectively for our clients despite the high level of uncertainty this continues to engender.
The opportunities presented by technological advances in general, and AI in particular, are also extremely important for our sector. The opportunities to improve efficiencies and delivery for clients are very attractive, but there are many risks also and financial advisers, operating as they do primarily in small to medium sized businesses, are looking for support here so they can fully realise the potential and avoid the risks.
The cost to practice is also a very big theme. We all understand that cost is one of the key reasons that many consumers, who could benefit substantially from financial advice, are not taking that first step to find a good financial adviser for them. Yet the costs keep rising, nudging $5,000 now from more recent studies. We must get that number down so that consumers can get the advice they need, and compliant businesses can grow and thrive in every different segment of the market.Reducing the costs advisers incur through inefficient and duplicative regulation and compliance is a critically important part of the way we’ll achieve this.
I’ll finish off this one with a note that we really do desperately need more great financial advisers in this country. We lost almost half of our numbers over the past five years, being down to under 15,600 at the end of 2023. This is no-where near enough and the big imbalance between the demand for advice and those who supply it, is undoubtedly a factor in the cost. More advisers coming through gives our profession the opportunity to serve a broader segment of the market, in particular representing younger consumers.
Another huge opportunity is coming from the increasing trust in the professionalism of financial advisers and recognition of the important role we play in the economy and peoples’ lives. In its latest survey, the Governance Institute found that financial advice was one of the professions where trust is increasing the most rapidly. There is plenty of demand for our services, and this is only increasing as the demographics of our population shift further towards ages when advice is often first sought, and the wealth levels of Australians continue to rise.
There are many, so it’s very hard to pick just one! But I think the top would have to be a thoughtful and considered response to the Quality of Advice review, with appropriate safeguards, legislated within the current calendar year.
If I am allowed a second, I would like to see the positive changes in our profession recognised by government and regulators. There are a myriad of ways this could be achieved, for example with providing financial advisers access to the ATO portal. More broadly, professional recognition would involve the profession having more sway over the standards that apply to financial advice.
First I would say a big “Congratulations!” - You have chosen a great profession which is all about helping people be better off, and one where there is huge demand for your services. There is also increasing recognition, respect and trust of the public in what you do.
I think it’s so important when starting out in your career, to find a great mentor who will both support and challenge you, and a great group of peers who are working in the areas that you plan to build your career. It’s a great positive of this profession that it abounds with advisers who genuinely love to help each other and get great satisfaction from seeing the success of their colleagues. The support you need is there, all you need to do is reach out.
I would also say to be passionate about what you do - always looking for improvement opportunities and focusing on delivering great outcomes for your clients.Sometimes it can be easy to focus on negatives and the things that aren’t fixed– they will always be there, although the issues themselves will change from time to time. People with an optimistic outlook and a focus on what’s within their control will always thrive.
To finish - of course, I would also recommend that you join your professional association!This is a great way to get involved and play an active role in the future of financial advice!