Financial advice in Australia under review

The Quality of Advice Review is currently underway, seeking to ensure “that Australians have access to high quality, affordable and accessible financial advice”. However, a number of consumer advocacy organisations, including CHOICE, have raised concerns that the proposed changes will reduce consumer protections and open the door for conflicting or poor financial advice leading to significant loss and hardship.

CHOICE CEO @AlanKirkland had this to say on Twitter:

Let’s remember why the big banks all decided to get out of financial advice: when they had big advice businesses operating without strong consumer protection they ended up paying out millions of $$$ in compo for poor advice. Who’d want to go back there?

Are the proposed reforms opening the door for trouble? We welcome your views on the issue, add them to the thread below.

There is a lot of information to consider to here, but as mentioned in the above ABC article, here is a basic summary of the proposals:

Quality of Advice Review consultation proposals:

1.Regulation of personal advice
2.“General advice” should no longer be regulated
3.Obligation to provide “good advice”
4.Requirement to be a relevant provider
5.Personal advice to superannuation fund members
6.Superannuation funds to decide how to charge members for persona advice, allow collective charging
7.Allow super funds to pay a fee from member’s superannuation to an adviser
8.Scrap ongoing fee disclosure statements
9.Statement of advice to be maintained for retail clients
10.Make financial services guide available
11.Simplify reporting requirements
12.Allow adequate transition time, allow for providers to “opt in” early

The article goes on to mention:

Financial advisers or “relevant providers” who get paid a fee for service would still be required to meet existing professional, ethical and educational requirements.

However, people employed by product issuers such as super funds, banks or insurers, with only some training, would also be allowed to provide advice to customers.

CHOICE has specifically highlighted the following key points where action is needed:

  • Ban all remaining conflicts of interest in the advice industry.
  • Retain the best interests duty (this is in contrast to point three of the proposals).
  • Consider alternative models to financial advice for people seeking guidance.

For a deeper dive, here’s some shortcuts to the Treasury’s Proposals Paper and CHOICE’s full submission paper (PDF) to begin. We look forward to hearing your thoughts and impressions on the issue.


AK’s twitter doesn’t really tell the story.

The big banks got into the Wealth Management business because it was a huge cash cow.

Push their own products onto clients with no regard as to the suitability or performance. Charge upfront fees, trailing commissions, fees to advisors for no service.

Once revealed and fees had to be reimbursed, or discontinued, these businesses were no longer the cash cows they were, and most banks have sold off their Wealth businesses.


It’s about time a review of these services was undertaken .


I don’t know if it is covered, but there is a serious shortage of ‘independent’ financial advisers. There needs to be some guarantees and assurances to clients that an advisor claiming to be independent actually is.

When I needed financial advise many years ago, there was only one truely independent advisor in the whole of a capital city who I could rely on the give me the best advise for me.

We rely on Choice for its independence. Surely we deserve the same for financial advise too.


I’d like to stress the point that not all FAs are greedy crooks. I had one here in Perth years ago who put me on to a very good pass towards my retirement goals.
However my Superfund alloted a FA to my account. He lived on the other side of the country and was never asked for or required by me. On my query I was told that the Superfund did not impose the FA fee to my account and thus they did not have to refund me anything. Yeah right…:frowning:
I am currently on the lookout for an Estate Planner / FA and it surely is a bit of Russian Roulette to find a good one.


Maybe Choice can provide some advice. Here is one article.

But, advice is one thing. If you are looking for a facilitator to get you into investments, then for independent service you would expect to pay for that.


Estate Planning and Financial Planning are different needs. It may be best to discuss the differences with a legal representative, possibly one that would or has provided personal services such as Wills, Enduring Power of Attorney,

A lay view tempered by one recent experience.
Estate Planning is usually associated with having in place appropriate legal and professional administrative controls that may be necessary towards one’s end of life. The needs may be simple or for those with complex high wealth investments require more careful consideration.

There are separately FA/P who have expertise in rearranging how/where wealth is invested as we age and needs change. Many also offer to manage all those investments and financial matters indefinitely. The ongoing fees are substantial. There are risks. Our one adventure in that direction suggests it is best to independently research all your options before going near any service providers. Have a clear picture of what your real needs are and understand what is practical/wise in advance. If at all possible don’t enter into any discussions or agreements alone. Having a trusted family or friend present for second thoughts can save a poor choice.

On committing your trust, a FA/P has nothing to loose but your money? :see_no_evil:

This discussion is a little off the original topic. Looking to the most recent posts it demonstrates consumers can have varying levels of understanding of the roles and services available. All the more reason IMO for stricter regulation of the various professions, the services they can offer and the conditions attached. IE Better protections against poor advice and performance for the average consumer when dealing with matters many don’t fully understand.


I was using an independent financial advisor.

They helped us buy land and build properties. We discovered they were all massively overpriced. They also recommended I buy a substantial amount of shares which are practically worthless now (i’m about to sell them to get a tax benefit for the loss). I stopped seeing this company when they recommended I move some of my good investments into other products that would probably have benefitted them more than me.

Now i’m hesitant to use any financial planner even though I should see one before I retire.


Some superannuation funds offer financial advice/planner to assist with planning for retirement. It might be worth approaching your super fund, if you have one, to see if they offer such support and what services they have.


Yes, I think that’s the option i’ll take. I have a few years to go till i’ll have to take some action.


The Quality of Advice Review - Final Report was released today. There are 22 recommendations in the final report, too lengthy to list here, and we’re calling it a recipe for another royal commission.

Here’s what Alan Kirkland, Chief Executive Officer of CHOICE had to say:

“This report is a recipe for another Royal Commission. The radical changes that it recommends will expose consumers to unacceptable risk when obtaining financial advice from a bank or super fund.”

“The biggest scandals in financial advice have involved large banks and super funds, yet they will be the greatest beneficiaries of the recommendations in this report. They will be able to undercut independent professional advisers by pushing out cheap and shoddy advice on a mass scale, provided by unqualified staff.”

One of the key recommendations for consumers is the ‘Good Advice’ duty. Here’s the definition from the report:

And some further explanation from the final report:

I deliberately chose the term ‘good advice’ because it describes simply, clearly and directly what consumers want and what the law should require. In my view this would encourage better quality advice and provide consumers and advisers with a clear statement of what they can expect and what they are required to do.

Having said that, some people worry that it will lead to poorer quality advice and they say they do not know what good means. I do not think there is any reason for saying a duty to give good advice is a duty to give advice that may be of a lower standard than that required by the best interests duty as currently formulated in the Corporations Act. A duty to give good advice is not, and is not intended to be a duty to give ‘okay’ advice or ‘good enough’ advice. I think most people would agree that ‘okay’ and ‘good enough’ do not reach the level of ‘good’. Nevertheless, I understand that knowing what is good in a particular case might be difficult and so I do accept there is a need for a definition of good advice.

Alan Kirkland responds:

“The proposed changes to the tests for the quality of advice - with a new best interests duty for independent advice and a ‘good advice’ test for advice provided by banks and super funds - will add even more complexity to the system. This will be a lawyer’s picnic. It will take years for the courts to clarify new legal definitions and lots of people will lose money in the meantime.”

“We agree that there’s still plenty the government can do to improve regulation of advice, starting with reforms to the meaningless reams of information that consumers currently receive from advisers. We encourage the government to focus on practical reforms that can make the system more effective, rather than the radical recommendations that would undermine consumer protection.”


More from CHOICE on financial advice reforms:


Sans the US context that a financial advisor should be a fiduciary I steer clear of them here. In my first week off the airplane a Westpac financial advisor called me in ‘to help me get acclimated to the local financial world’. Nice framing but transparent. At the time Westpac was pushing their BT brand hard and at the time it was a marvel of underperformance. He input my profile in his PC, asked me a few additional questions and concluded that I was not going to be his advice or BT’s customer because I expected recommendations and investments to have successful long term track records. To his credit I never heard from him again.

A basic question for engaging any financial advisor is whether they are going to be fiduciaries or sales people. If they respond as the former but deliver as the latter it can put them in jeopardy. A useful overview that should apply locally but seems not to.


CHOICE’s response to the announcement on implementation of Quality of Advice review recommendations:

Alan Kirkland, Chief Executive Officer of CHOICE:

“We welcome the Federal Government’s sensible and measured approach to improving consumer outcomes in financial advice. If designed correctly, these reforms will meaningfully improve access to advice, without watering down important consumer protections.”

“We are pleased that the Federal Government has heard the concerns of consumer groups about the more radical and harmful recommendations of the Quality of Advice Review. The recommendations that would have slashed consumer protections for advice provided by banks, insurers and fund managers were criticised by a broad range of stakeholders, including academics and independent financial advisers. The government has not accepted any of those recommendations at this stage.”

“By focusing on sensible regulatory reforms in the short term and then addressing access to advice within the super system for people approaching retirement, the government’s response is consistent with the approach consumer groups recommended in a letter to the Treasurer and Assistant Treasurer in March.”

“We look forward to engaging with the Federal Government’s consultations. We know many people across Australia are approaching retirement and need assistance about next steps in their financial journey. We need greater access to advice at the retirement phase, with strong safeguards to ensure that advice is in the best interests of the people who seek it. This needs to be supported by simpler and fairer products for people in retirement.”