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Finance professionals are stressed to breaking point by the adviser licence rules, SMSFA conference hears.
‘Stupid’ advice regime has huge mental health cost
22 April 2022
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9 minute read
A cross-section of finance professionals has joined together to condemn the adviser licensing rules as “stupid” and responsible for a mental health crisis among their members.
In a rare show of unity, leaders from across the industry said the AFSL regime was causing an exodus of advisers, preventing cost-effective advice to clients and stressing their members to breaking point.
A panel comprising Phil Anderson of the AFA, Marisa Broome of the FPA, Simon Grant of CA ANZ and Vicki Stylianou of IPA spoke with one voice about the need for change at the SMSFA Conference in Adelaide this week.
But they held out little hope that the Quality of Advice Review, which is due to report by the end of the year, will result in the necessary reforms.
Mr Anderson said the adviser rules pushed up costs and were poorly targeted.
“We’ve had too much focus on what the unadvised might want, potentially in the future. It has to be driven by what real clients are experiencing now and what adds value to them and what doesn’t,” Mr Anderson said.
“We have to reduce the cost of providing financial advice. We have to reduce unnecessary complexity.”
Ms Broome also described the system as “over regulated, over complicated” with a disclosure regime that was “too prescriptive”.
“It doesn’t allow quality of advice that is comprehensible to the consumer to be delivered,” she said. “And I guess it goes back again, to that onerous disclosure regime, I’d like to see a disclosure regime that … actually is meaningful to the client.”
Mr Grant said advisers themselves needed to be responsible for the quality of their advice and threw down a challenge over the rules to the Assistant Treasurer, Michael Sukkar, and his shadow counterpart Stephen Jones.
“You go and talk to any accountant in your high street, in your electorate … and they will tell you how stupid it is,” Mr Grant said.
“Not only will they tell you how stupid it is, their clients will tell you how stupid it is.
“And they have a whole bunch of small business clients in every electorate in every part of Australia. And they are not getting a very good advice.”
Ms Stylianou said the terms of the advice review were too narrow and pointed to a lack of political will for change.
“What we’re also hoping for is just an appetite, a political will, for bold reform, because I think if we’re going to fix a lot of the problems in this sector, there really, really needs to be bold reform. And bold reform has been missing for so long - for more than a decade in so many areas,” Ms Stylianou said.
But the most poignant moment came towards the end of the session when the moderator, SMSFA chief executive John Maroney, read an anonymous comment from an attendee about the stressful results of the current regime.
The audience member said: “I’ve seen an accountant having a complete breakdown, trying to get licensed as he wanted to be able to advise his clients back when changes came in.
“He is now seeing a psychiatrist over his mental health, not being able to keep up with the compliance of technology as he is older, being forced to retire as he just can’t pass the exams.
“It’s fundamentally important that advisers are supported or many more will go.
“I feel for so many people suffering due to clueless government departments trying to justify their jobs.”
Ms Broome said her organisation was striving to support its members and she had seen the mental health costs up close.
“I was fortunate enough to do 31 of our roadshows last year and I experienced outstanding advisers sobbing on my shoulder at just about every one of them,” Ms Broome said.
“It troubles me to my core that we’ve got people under that level of stress, and it’s one of the things I’ve prioritised. We’ve tried to support people, I have a list of about 15 people I regularly get in contact with, just to make sure they’re OK.”
Vicki Stylianou said the Counting on U program, run in conjunction with Deakin University, was a vital support for those under stress.
“It is very much about supporting mental health and building resilience,” she said.
“It’s to equip not just accountants, but financial advisers, and bookkeepers … to be able to recognise the signs but also to look after themselves, because there’s a lot of vicarious kind of stress.”
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- I can only imagine that we are where we are because influential organisations do not want the common sense of accountants interfering with "financial advice". Governments really must learn to govern one day!0
- the AFSL system is insane and the concoction of thoughtless bureaucrats. Mr. Grant from CA ANZ and the others put it well when they call it "stupid".
Australian Accountants are already highly-qualified with a post-grad education. the profession is well regulated with a high adherence to professional ethics which is mandatory for members of the profession whether they belong to IPA, CPAA, or CA ANZ.
we don't need another layer of bureaucracy (directly responsible for pushing up the cost of advice) in the form of AFSL business owners, who are not in the business of providing advice but in the business of authorized representatives.
I already completed a master's degree (AQF 9) which is the highest accounting award in Australia. furthermore, I already completed and passed the fasea exam on the first sitting. and it did not take me a great deal of effort to complete the bridging subject (ethics) which I had already covered in my master's degree and passed with distinction.
I am a highly qualified, highly organized, self-sufficient professional with an unblemished record of serving Australians for more than two decades. I don't need unqualified people from an AFSL owner supervising me, they do not even understand the advice I am giving the client as they do not have the technical knowledge of super or tax or anything financial for that matter.
how is this even possible? Do lawyers and Doctors have someone authorizing them? they are self-licensed.2 - This article is spot on
However the Government wont listen and is hesitant tp admit they got it wrong when they pused
the last lot of reforms
I do not think these Gov people know how the day to day people make decisions, how people they do not have ceratinty,
how they do not always get paid , small business dont know what an RDO is etc
An even worse nightmare would be if it became an election isuue again and the politicains got involved
The system would then go even further backwards and never recover
0 - A bit of a counterpoint here. I think it's objectively correct to say that the regulatory environment faced by financial advisors is a perfect example of regulatory overreach. This overreach is causing substantial inefficiencies and stress. Having said that it seems to have been conveniently forgotten that the historical performance of financial advisors has been woeful. Endemic levels of poor advice and over charging is well documented. To me the solution is something most financial advisors do not want to know about. The first is to only charge time, no commissions no trails nothing (for those who argue this is not a viable model how to accountants and lawyers manage it?). The second, the client not the client’s superfund or investment manager must pay the advisor’s fee. (for those that argue people cannot then afford advice - have a look at dental care, among other areas, and the problems we face because the public cannot afford to access it). The third is shifting the regulatory environment from one of assuming everyone's up to no good, and then forcing all to document everything, to a regime of severe penalties. So, prison terms not just a fine where it can be proven, beyond reasonable doubt, that an advisor has sought to enrich themselves at the cost of their client (for those who argue this is unworkable look at some recent developed in industrial law).1
- excellent points.1
- I’d also say trying to run an accounting firm where the clients wont hand in info and are late lodgers is also stressful, the ATO should actually fine late lodgers and support accountants to meet deadlines.-2
- Due to the high regulation and costs people heading into retirement who really need good advice can't afford to access it. Regulation has tried to stop the few that were doing the wrong thing. My experience is that few will still find a way to do the wrong thing and in the mean time we now have a lot of low or medium income people who would greatly benefit from advice but can't afford it due to the high cost of regulation2
- I totally agree, this is where it needs to change1
