Australia’s financial advice industry could be heading towards another major transformation.

In this episode of The Account Rant, Latitude Accountants CEO John Saade sat down with Leigh Morris, founder of SFP Financial and the voice behind Financial Leigh, to discuss the Albanese Government’s proposed shake-up of the financial advice industry.

The proposed changes could create a new class of adviser, allowing large superannuation funds and life insurers to provide a wider range of financial guidance to their members under lower qualification requirements than those faced by fully qualified financial advisers.

Supporters may argue that the reforms could make financial advice more affordable and accessible. However, Leigh Morris believes the changes raise serious questions about fairness, competition and whether Australians will continue to have access to genuinely independent advice.

The conversation also explored the growing influence of large super funds, the pressure facing smaller financial advice firms, SMSFs, compliance costs and the future of financial advice as a profession.

What Is Changing in Australia’s Financial Advice Industry?

According to the discussion, the Government’s proposed reforms would expand the ability of superannuation funds and life insurers to provide certain types of financial advice and guidance to their members.

A new class of adviser could potentially operate under lower education requirements than fully qualified financial advisers.

Banks, however, would be excluded from the regime initially.

The intention behind the changes is to make financial advice more accessible and affordable for everyday Australians. Many people currently struggle to access professional advice because of the cost involved.

In theory, allowing more people to provide limited financial advice could help Australians receive assistance with areas such as:

• Superannuation decisions
• Insurance
• Cash flow management
• Debt strategies
• Basic financial planning
• Retirement preparation

However, the major concern raised by John Saade and Leigh Morris is not necessarily the idea of creating more affordable advice.

The concern is who will be allowed to provide it.

Why Does Leigh Morris Believe the New Rules Are Unfair?

Leigh Morris previously worked as a financial adviser and experienced many of the regulatory changes introduced across the industry.

Financial advisers have faced increasingly demanding requirements over the years, including higher education standards, professional examinations, supervised professional experience and continuing professional development.

Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, compliance requirements also increased significantly.

These changes were designed to improve professional standards and protect consumers.

However, Leigh argues that the reforms created a difficult and expensive environment for smaller financial advice businesses.

From his perspective, independent advisers spent years adapting to higher standards, only to potentially see a new category of adviser introduced with lower barriers to entry.

His biggest concern is that independent financial planning firms may be excluded from employing and developing this new class of adviser while large superannuation funds receive access to the new system.

Two Different Sets of Rules?

This creates what Leigh describes as a potential imbalance.

Independent financial advisers may continue to face:

• Higher education requirements
• National examinations
• Professional development obligations
• Extensive compliance systems
• Significant documentation requirements

Meanwhile, large institutions could potentially provide a broader range of advice through advisers operating under different requirements.

For smaller businesses, this raises an important question:

Why should large institutions have access to a lower-cost advice model if independent financial advice firms cannot participate in the same way?

Could Advice From Super Funds Create a Conflict of Interest?

One of the biggest concerns discussed by John and Leigh is the potential for conflicts of interest.

Independent financial advisers can consider a broad range of strategies and products when working with clients. Depending on a client’s circumstances, that may include remaining in a particular super fund, changing funds, establishing an SMSF or considering investments outside the superannuation system.

However, a large super fund has an obvious interest in retaining its members and their money.

John raised the possibility that Australians who may previously have sought independent advice could instead receive advice directly from the institution managing their superannuation.

This creates an important distinction between receiving advice from an independent professional and receiving guidance from an organisation that may also provide the products being discussed.

That does not automatically mean advice provided through a super fund is inappropriate.

However, consumers should understand the difference between limited advice provided within an institution and advice that considers options across the broader market.

Consumer Choice Could Become More Important

As more financial services move towards large institutions, Australians may need to become increasingly aware of where their advice is coming from.

Questions consumers may want to ask include:

• Is this advice limited to products offered by this organisation?
• Are alternatives outside the organisation being considered?
• Would an independent adviser provide a different perspective?
• Is the adviser qualified to provide advice on my specific circumstances?
• Are there other strategies I should investigate?

The key issue is ensuring Australians continue to have access to choice.

What Does This Mean for Independent Financial Advisers?

Independent financial advice businesses could face increasing pressure.

Financial planning firms have already experienced significant regulatory and compliance changes over the past decade.

Compliance is necessary for consumer protection, but it also comes with a cost.

John Saade discussed Latitude Accountants’ previous experience entering the financial planning industry and the significant documentation required even when providing relatively straightforward recommendations.

For a small advice business, extensive compliance requirements can make it difficult to provide affordable services.

The more time advisers spend meeting administrative requirements, the more expensive it can become to provide advice.

This has created a difficult situation where everyday Australians may struggle to afford professional financial advice.

If large super funds can provide lower-cost guidance while independent firms continue operating under higher compliance costs, smaller firms may find it increasingly difficult to compete.

Could Affordable Financial Advice Still Be a Positive Outcome?

Despite his criticism of the reforms, Leigh acknowledged an important point.

Australia does need more affordable financial advice.

Younger Australians and people with smaller superannuation balances may benefit from access to lower-cost, limited advice.

Not every person needs complex financial planning designed for high-net-worth individuals.

Some Australians simply need help understanding:

• How to manage debt
• How to improve cash flow
• Whether their insurance is appropriate
• How to organise their finances
• How to prepare for future financial goals

A lower-cost advice model could potentially help these Australians.

However, Leigh’s argument is that the opportunity should not be limited to large super funds and insurers.

Independent financial planning businesses could also train and develop new advisers under experienced professionals.

This could potentially create a more competitive advice market while giving consumers more choice.

What About SMSFs and Residential Property?

The conversation also explored concerns around self-managed super funds and residential property.

John and Leigh discussed the impact of restrictions involving borrowing arrangements within SMSFs and how regulatory changes could make certain strategies less accessible.

For many Australians, SMSFs have historically provided an alternative to traditional superannuation funds.

However, SMSFs are not suitable for everyone.

They involve significant responsibilities, compliance obligations and costs.

The broader concern raised during the discussion was whether changes across the financial services industry could gradually reduce the number of alternatives available to Australians.

As large institutions become more influential, maintaining access to independent advice and alternative financial strategies may become increasingly important.

Should Young Australians Become Financial Advisers?

The future of the profession was another major concern.

Becoming a fully qualified financial adviser requires significant time, education and commitment.

Leigh questioned whether young people would be attracted to the profession when the pathway is long, heavily regulated and potentially difficult to build a profitable career around.

The industry has already experienced a significant reduction in the number of practising advisers.

If fewer young professionals choose financial advice as a career, Australia could eventually face a shortage of independent advisers.

This could leave a market increasingly dominated by:

• Large superannuation funds
• Major financial institutions
• Advisers serving high-net-worth clients

The middle market may be the group most at risk.

The Future of Financial Advice in Australia

The goal of making financial advice more affordable is difficult to argue against.

Many Australians need professional guidance but cannot justify the cost of comprehensive financial planning.

The challenge is finding a way to improve affordability without reducing competition or limiting consumer choice.

As John Saade and Leigh Morris discussed, the biggest question may not be whether Australia needs a new category of financial adviser.

It may be whether the system should be available more broadly.

If limited financial advice can be provided safely and effectively under a lower-cost model, independent financial planning firms may also have an important role to play.

Australia’s financial advice industry should ideally offer consumers more options, not fewer.

Frequently Asked Questions About Australia’s Financial Advice Industry Shake-Up

1. What are the proposed financial advice changes in Australia?

The proposed reforms discussed in The Account Rant could allow superannuation funds and life insurers to provide a wider range of financial guidance to their members through a new class of adviser. The proposed model would have lower education requirements than those applying to fully qualified financial advisers.

2. Why are independent financial advisers concerned about the changes?

Independent financial advisers are concerned that they may continue to face higher education, examination, professional development and compliance requirements while large superannuation funds gain access to a lower-cost advice model. Leigh Morris argues that financial advice firms should also be able to employ and develop advisers under the new pathway.

3. Will super funds be able to provide financial advice to their members?

Under the proposed changes discussed in the episode, super funds and life insurers could provide specific types of advice and guidance to their members. The reforms are intended to make advice more accessible, but questions remain about the scope of advice and the safeguards that will apply.

4. Why could financial advice from a super fund create a conflict of interest?

A potential conflict could arise because a super fund has an interest in retaining its members and the money held within the fund. Independent advisers may be able to consider a broader range of strategies, including changing super funds, establishing an SMSF or investing outside superannuation. Consumers should therefore understand the scope and limitations of the advice they receive.

5. Why are banks excluded from the proposed financial advice regime?

The reforms discussed in the episode would initially apply to superannuation funds and life insurers, while banks would be excluded. According to the discussion, the exclusion for banks could remain in place for several years.

6. Will the new financial advice rules make advice cheaper?

One of the key objectives of the proposed changes is to make financial advice more affordable and accessible to Australians who may not be able to afford comprehensive financial planning. Leigh Morris agrees that lower-cost, limited advice could benefit younger Australians and people with smaller superannuation balances, but argues that the model should also be available to independent financial advice firms.

7. What are the education requirements for the new class of financial adviser?

The proposed new adviser pathway could have lower education requirements than those applying to fully qualified financial advisers. The discussion raises concerns about creating different education and professional standards for advisers depending on whether they work for a large super fund or an independent financial planning business.

8. How could the reforms affect small financial advice businesses?

Small financial advice firms could face increased competitive pressure if they continue to operate under higher compliance and qualification requirements while large super funds can provide limited advice at a lower cost. Leigh Morris argues that established financial planning firms could also play an important role in training and mentoring new advisers.

9. How could the changes affect SMSFs and residential property investment?

The discussion suggests that the reforms could further influence Australians’ decisions about where they hold and invest their superannuation. John Saade and Leigh Morris also discussed restrictions affecting residential property borrowing through SMSFs and questioned whether these changes could create additional incentives for Australians to keep their money within large superannuation funds.

10. What could the future of financial advice look like in Australia?

The future could involve a greater role for large superannuation funds and life insurers in providing limited financial advice, alongside traditional independent financial advisers. The key challenge will be balancing affordability and accessibility with professional standards, competition and consumer choice. The discussion suggests that Australians should ideally have access to different advice options rather than having the market increasingly concentrated among large institutions.

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Disclaimer

This article is based on a discussion featured on The Account Rant involving John Saade and Leigh Morris and is intended for general information purposes only. It does not constitute financial, legal, tax, mortgage, superannuation or business advice. The views discussed may not apply to your individual circumstances. Financial services regulation and Government policy may change, and you should speak with an appropriately qualified professional before making decisions about your finances, superannuation, investments or financial planning.