Good news for Australians seeking financial guidance! The Government has announced plans to make quality financial advice more accessible and affordable for everyone.
Why is this important?
Recent studies show that many Australians need financial advice but can’t afford it: 4 in 5 Australians aged 45 to 54 need financial advice but aren’t able to afford it; and 74% of Australians aged 18 to 34 have unmet advice needs. Assistant Treasurer and Minister for Financial Services Stephen Jones MP says the proposed reforms aim to meet those needs by “making high quality, safe and affordable financial advice available to more people”.
What’s changing?
The Government is introducing 2 key changes: creating a new class of financial adviser to deliver simple advice; and modernising financial advice to support the provision of targeted, more affordable advice.
New class of financial adviser
The new class of adviser will provide safe and simple advice to more Australians, for example assisting with choice of an insurance policy or answering basic questions on retirement. The new class of financial advisers will be: restricted to providing advice on products issued by prudentially regulated entities; prevented from providing advice on more complex or high-risk areas such as establishing self-managed superannuation funds (SMSFs); required to complete an Australian Qualifications Framework (AQF) level 5 diploma; and limited to advising existing customers of a licensee, and new customers where the customer initiates the request for advice. These restrictions will ensure advisers focus on simple topics, and provide a clear boundary between the new class of advisers and professional financial advisers. Licensees employing the new class of advisers will be wholly responsibly for the provided advice, and will be subject to additional monitoring and supervision obligations to ensure that their employees only provide advice within their expertise and authorisation, and comply with the best interests duty and other obligations. Licensees may choose to indirectly charge for advice, but will have the option of directly charging a fee for advice provided by the new class of advisers, who will not be permitted to charge ongoing fees or receive commissions. This is to keep the new advisers focused on providing simple, episodic advice.
Modernising financial advice
The remaining proposed reforms include: simplifying the “best interests” duty for advisers; replacing complex statements of advice with clearer, more helpful information; reviewing education requirements for financial advisers; clarifying what advice can be paid for through your super; and allowing super funds to remind you about important financial decisions at key life stages.
What does this mean for you?
Ideally, these reforms will offer: more affordable advice options in the near future; easier access to basic financial guidance; and clearer information to help you make informed decisions. While these changes aren’t in place yet, their announcement is a positive step towards helping more Australians get the financial advice they need. Remember, your accountant is always here to help with your financial queries. Don’t hesitate to reach out if you have any questions about how these changes might affect you.
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