It's clear that money will be on lots of people's minds in 2022. Inflation has started to rise, driven by rapid growth in house and fuel prices, while wages and interest on savings are failing to keep up.
We do our best to help you manage your household budget through our tips on how to manage your health insurance, how to plan for retirement, or how to find good-value appliances. But we're aware this advice only goes so far. Some people need personalised help, especially when it comes to managing savings and investments.
In the time I've been with CHOICE, we've helped to secure huge reforms to the way financial advice is provided. Most sales commissions are now banned and advisers are required to act in your best interests. We've also seen major banks and investment firms face large fines for charging people for advice that was never provided.
Despite these changes, when Kenneth Hayne looked at the financial advice sector at the end of the banking royal commission, he still wasn't satisfied that there had been enough progress. He recommended a further review, to determine whether people were able to find the good-quality advice that they deserve.
That review is about to get underway, so over the coming months expect to see industry groups complaining about 'red tape' and 'regulatory burden'. They'll be arguing that advice has become unaffordable and that we need to reduce regulation so that it can become cheaper.
Perhaps the reason that the cost of advice has become a problem in Australia is because we still assume that the best way to provide advice is through the private market
But advice has to involve a bit of work to be good, and it's hard to see how you could cut the cost of advice without compromising on quality. It takes times for an adviser to understand all of your circumstances in order to help you work out what's best for you, whether that's paying down some debts or moving your super to a better fund.
Perhaps the reason that the cost of advice has become a problem in Australia is because we still assume that the best way to provide advice is through the private market – despite the fact that as more and more people retire with decent superannuation balances, more and more will want some kind of help.
Confronting similar problems, the United Kingdom government decided a few years ago to take a different approach, establishing a Money and Pensions Service that provides free, impartial advice on a broad range of money issues. People can still go to private advisers for complex advice but the new system recognises that most people don't need that.
We have a strong history in Australia of free, government-backed services in areas where they are universally needed, such as in health and education. Perhaps it's time for us to apply the same approach to financial advice.
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