Not too late to reverse past reform failings, CEO says – Life Insurance – Insurance News

Connect Financial Service Brokers CEO Paul Tynan has called for a different way of thinking on reform in order to save the struggling advice industry.

He says there is still time to reverse the failings of regulatory changes implemented in the last two decades by focusing on scale and financial literacy.

The advice industry has reached a “crisis” point, an outcome that is not surprising since reforms have for too long been characterised by conflict and division, and has failed to effectively respond to technological and social changes, Mr Tynan says.

As a result, consumers have lost faith in the sector’s ability to deliver affordable and accessible advice and reliable, relevant products and services.

“The solution is simple,” Mr Tynan said. “The sooner politicians adopt a bi-partisan approach and vocal lobby groups put self-interest aside, the sooner all stakeholders will find the courage and wisdom to restructure financial services with purpose, for growth and success.”

He says financial advice needs to move down the path of removing power away from super funds, lawyers, institutions and putting it the hands of the consumer.

According to him, the first step to implement is the introduction of a new advice framework comprised of three categories or three levels of advice: consumer information, proprietary advice and personal advice.

“Whether consumer information, proprietary advice or personal Advice, the financial practitioners will help consumers achieve their specific financial goals,” Mr Tynan said.

“While they share similarities, they differ in the types of service they offer and the remuneration rates at which they offer them.”

He says the three categories will facilitate scalability in the provision of advice to Australians.

“Scale is essential and an immediate benefit will be the ability for advice practices to grow, streamline operational/administrative/compliance operations and activities,” Mr Tynan said.

It will also reduce costs and encourage new entrants to join the advice industry.

He says the Australian advice industry needs also to utilise digital media platforms more effectively as a vehicle to engage with consumers of all ages.

“Far too many are still failing to use it effectively as an essential component of their client experience, business marketing and communication strategy,” Mr Tynan said.

In relation to financial literacy, he says the current education curriculum is failing the nation as it neglects to provide the essential knowhows of financial wellbeing in classrooms.

“Throughout their lifetime, Australians are more responsible for their personal financial well-being than ever before, yet simultaneously the vast majority lack the fundamentals of financial literacy,” Mr Tynan said.

“This is of acute concern and needs immediate attention.”

He says financial literacy courses should be compulsory in all schools for students in years 10 to 12.