From a financial advisors’ point of view, a lot of the current debate on the value of advice is more than a little bemusing. Over many years the role of advisor has evolved from what was predominantly an insurance advice role (~40 years ago) through superannuation advisor (~30 years ago), investment advisor (~20 years ago) and eventually moving to the current position whereby more an more advisors are capable of helping with a whole range of financial issues.
There have been the equivalent of ‘demarcation disputes’ between Accountants and Financial Planners over the provision of ‘incidental’ advice for superannuation and taxation issues. There have been attempts by fund managers to exclude Financial Planners from having influence on moneyflows by stopping any servicing commission (BT tried that one a number of years back). So-called ‘Industry Funds’ (a coalition of diverse retail superannuation funds with a low fee and, apart from a few fund leaders, low service offering) have taken the high ground to state that there is a new moral imperative, and the decisions relating to Australia’s superannuation accumulations should be devolved to the trustees of those funds as only they are capable to true honesty and ethical conduct when it comes to fees*. Virgin Money and BT have actively promoted “cheap” funds focussing marketing on the benefit of NOT paying commissions, while offering products that a good financial advisor could set up for you with minimal additional cost (mind you, i am biased – that is only of benefit if you see that there is some sort of advantage in having an advisor to discuss your superannuation issues with). Banks many years ago started buying up ‘wealth managers’ (BT, MLC, etc, etc) to be able to have their profit channels behind all of the services you need.
Where am i going with this? My pontificating was triggered by an article on Reuters about Wal-Mart (the world’s largest retailer) opening 1,500 money centres in its stores. The reason for this piquing my interest is that i part of my research into all things money recently led me to wonder why the government had not set up and promoted a central website on superannuation – after all, a great deal of enquiries on super are more about thresholds and rules than specific personal advice? For fun, i looked up http://www.superannation.com.au. Try it, you’ll be surprised at the result – at least, i was!
So the point of this is that the provision of financial advice is being commoditised to the point where some see it as being a standard retail product. i actually like that idea. The important factor missing in amongst the very public stoush between Industry Super funds, Retail Funds, Government Regulators and Consumer Groups (i’ve allocated capitals to everyone just to be fair) is that only a small proportion of Australians use the services of a financial planner. The industry trends are pushing for more comprehensive advice to be provided under more stringent conditions, which will result in even higher costs and fees to obtain that advice. The Industry Funds push to have all advice paid for on an hourly rate will lift the costs of that service for small account holders (feel free to argue that one with me, as i am more than aware of the alternative points of view) and so, yet again, more roadblocks are put in place to make it harder for the “average” person to access financial advice.
The way i see it, the more ways people can access advice (at all levels of sophistication), the better outcomes for the community generally.
* My point above is a bit tongue-in-cheek. i actually like the low fee service provisions provided by members of the ‘industry fund’ grouping. It’s just that i personally think their marketing is inappropriate and the rhetoric on the provision of superannuation services to be demagoguery at best and patronising of the general public at worst. That doesn’t stop me being keen on their services, it just provokes me to be clear in delineating where the benefits of those services stop.