Is Financial Advice beyond the reach of Average Australians? - Steve Marsten
Who really needs financial advice? I think if I had my time over again I would have liked my practical financial advice in my early 20’s. In recent years the Governments of the day have carried out inquiries and Royal Commissions on the financial advice industry and have been fairly damning in their findings. To be fair, these inquires were needed to flush out a few cowboys and get the Industry back on a more integral footing. As with all Government changes, and theirs was named The Future of Financial Advice (or FOFA) in my opinion, they seemed to go too far and cause undue damage to the industry.
When considering where we are to date following the aftermath of the new reforms, perhaps we should stop and look around to check what’s been achieved.
Up to our mid-30s Aussies are paying for education or saving for a house. At around 42, research shows they start to consider risk or life insurance. Most Aussies start planning for retirement at 54. Of course now the massive household income to house price ratios put significant pressure on younger Aussies.
In the early 80s, it was typical that only one member of the household would work to support the family and pay the mortgage. Today, it’s usual for both members of the household to work and yet they still find it a struggle to buy a home.
The latest research from Investment Trends shows that 2.1 million Australians say that they want and will get financial advice in the next two years.
The issue has been that post-FOFA, the average wealth of the person in Australia getting advice has doubled. Not because they got good advice. Now you need twice as much money to have a planner as you did pre-FOFA.
Young investors of today don’t want Statements of Advice (SoA’s in Industry speak) or Fee Disclosure Statements (FDS’s in Industry speak) or Opt-ins! They do want services. They definitely want advice. They crave for simplicity and everything via the one place if at all possible and they do desire professionalism. They need choice as to how and when and from where they pay their fees. It’s called transparency. Right now the huge bunch of paperwork and red tape make financial advice for those who truly need it – too expensive and unattainable. Is this really what ASIC and APRA and the Government and our politicians were striving for? Did anyone consult the under 35’s - average Joe, for what he needed as far as financial advice goes? I doubt it.
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