Driving Down Cost of Advice – Your Say

Compliance with the seven Safe Harbour steps is the single biggest driver of cost and the biggest obstacle to accessing affordable financial advice.
  • Agree (61%)
  • Disagree (28%)
  • Not sure (11%)

Our latest poll seeks your opinion about one of the key planks in the FSC’s blueprint for the future of financial advice, released last week (see: Landmark White Paper Blueprint…).

The council’s white paper details 31 recommendations intended to:

  • Drive down the cost of advice
  • Deliver significant time saving in the provision of advice
  • Create meaningful productivity gains that would allow advisers to serve more clients

The FSC references KPMG research findings on which the white paper is based, that project the full implementation of what the council states are its key recommendations will reduce the cost of advice by around $2,000 per client. The council’s three key recommendations are:

  • Abolishing the safe harbour steps*
  • Introducing Letters of Advice
  • Simplifying the categories of advice

While each of these key recommendations is pivotal in achieving a better outcome for advisers and the consumers they serve, the FSC ranks the abolition of the seven safe harbour steps as the most critical of all, with this opinion based on adviser feedback. It notes in its white paper that:

…the safe harbour steps are the number one driver of cost and the biggest obstacle to accessing affordable …advice

Feedback from across the advice community is that [the safe harbour steps are] the number one driver of cost and the biggest obstacle to accessing affordable and compliant scalable advice aligned with consumer needs.

Do you agree with this statement? Does it accord with your own experience as an adviser or as a member of an advice support team? Or do you think there’s another factor that trumps the seven safe harbour steps when it comes to driving down the cost of advice?

As usual, there’s more we can talk about, but it’s time to hand the conversation to you. Tell us what you think and we’ll report back next week…

*To satisfy the seven steps for safe harbour in section 961B(2) of the Corporations Act 2001, together with an eighth general provision, an advice provider must:

  1. Identify the objectives, financial situation and needs of the client that were disclosed by the client through instructions
  2. Identify the subject matter of the advice sought by the client (whether explicitly or implicitly)
  3. Identify the objectives, financial situation and needs of the client that would reasonably be considered relevant to the advice sought on that subject matter (client’s relevant circumstances)
  4. If it is reasonably apparent that information relating to the client’s relevant circumstances is incomplete or inaccurate, make reasonable inquiries to obtain complete and accurate information
  5. Assess whether the advice provider has the expertise required to provide the client with advice on the subject matter sought and, if not, decline to provide the advice
  6. If it would be reasonable to consider recommending a financial product: conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered relevant to advice on that subject matter; and assess the information gathered in the investigation
  7. Base all judgements in advising the client on the client’s relevant circumstances
  8. Take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances


  1. Separation of Church and State is a fundamental and progressive policy that allows an ideology to have rights to express their viewpoint.

    Where it becomes dangerous, is if “ideology” becomes Government policy.

    What has occurred in Australia over the last decade, has been an ideology that has been allowed to become Government policy, being the encompassing of Insurance advice and Investment advice as one and the same.

    If you take away the safe harbour 7 steps, you still need to look at the risk versus reward equation.

    Investment advice is wanted and Australians are willing to pay for it, as they know the complexity could financially cripple them if they do not get advice.

    This leads us to Insurance advice.

    Australians will not pay a fraction of what it costs Advisers to provide and as for, “let us think about and act on this now,” Life Insurance has never been a main priority.

    What we have to compare, is the pursuit of the Golden Goose, versus thousands of my hard earned dollars being spent on something I do not understand and will probably never get a return on.

    How we ever allowed these two entities to be classed as the same vessel, is beyond comprehension.

    What we need going forward, is Government policy based on what is real, not what was invented in a Lobbyists laboratory.

    • THANK GOD someone else besides me is talking about separating risk and investment advice. This is SO refreshing to hear Jeremy. Sadly, as we’d all understand, it is too late to change anything. It is this very non-seperation of risk/investment/financial planning domains that is causing me to leave our once great risk advice industry in November.

      This is the story we ALL should have been pushing many years ago. Some tried but there was no volume to our voice (thanks AFA) I know you have always spoken about this Jeremy but you and I were only 2 of the few. Why? I have no idea. Just easier not to?

      I can’t fathom why we lump the two (investment & risk advice) into one subject, exam and qualification. There are two distinct skill sets and educational support domains in taking this knowledge to the people and very different disciplines and skill sets in enacting it with the people.

      It would be tantamount to lumping a medical degree (GP) in with an psychology degree – couldn’t do one without the other. your average doctor may certainly not be predisposed to giving psychology advice but would be forced into it by the clueless regulators who thought it a good idea at the time! Imagine the rukus if that was the case. That makes as much (non)sense as having do do an AQF8 uni degree qualification just to be able to help clients with income protection, trauma, TPD and death cover. There may be a fraction of overlap (super/TPD) however that could easily be dealt with within the new risk exam/qualification.

      So thank you Jeremy for bringing this up again in your wonderfully inimitable style of writing. I hope your retirement plans are proceeding well Jeremy and things aren’t too torrid for you currently. You certainly deserve a great retirement after decades of top-notch service to your clients.

      • Thanks for your kind words and as much as retirement is an attractive proposition, I would probably last one week before my wife would tell me to go back to work and stop getting in her way.

        We are doing a lot of work behind the scenes to make some big improvements in the Life Insurance sector to make it a better place next year, though the FASEA exam and other hindrances have caused many experienced risk advisers to pull the plug and retire early which is a great loss.

        Keep an eye out and you never know, there may be a solution to many of the issues we are all facing.

        If you are retiring in November, then have a great “extended break” and you never know what the future could bring.

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