The Value of Advice research report

Content Summary

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Advocating for change

The provision of professional advisory services is governed by a complex and ever-changing regulatory framework. This is resulting in a rising compliance burden for advisers and, in turn, seeking professional advice has become more challenging for consumers.

The Value of Advice research report follows on from CPA Australia’s Regulatory Burden report. It demonstrates the value of advice and continues to advocate for reform to ensure advice remains affordable and accessible. A common theme of this commentary is the need for a client-centric model of advice.

The value of advice

Released on 25 November 2020, the Value of Advice report continues to push for regulatory reform by measuring the value of advice to consumers, small business and the community at large. The research has found that if more people use professional advice, we will be better off as individuals, businesses and, importantly, as a society.

In an Australian first, CPA Australia modelled the macro-economic impact of making professional advice available to the entire population. ‘Professional advice’ includes accounting, taxation, financial, superannuation, business, and mortgage broking advice, among others. CPA Australia found that if professional advice was available to all Australians; the total economic uplift could be $630.3 billion a year and spending on the Age Pension could be reduced by 21.6 per cent.*

The research also found that consumers and SMEs see financial advice very differently to lawmakers. If we are to make financial advice more available, we need to rethink the way professional advice is regulated and move towards a client-centric model. The four principle recommendations of a client-centric model include:

  1. reflect client goals, not product
  2. one regulatory regime, one regulator
  3. a single code of conduct
  4. individual registration of advisers.

 

*These figures are based on a macroeconomic model which measures income risk now and in a scenario where professional advice is properly implemented. The gap is expressed as a dollar value to demonstrate the value of professional advice.

The voice of the consumer

CPA Australia worked with independent research house CoreData, to conduct 20 in-depth interviews with consumers and SMEs at different life stages to gauge their different advice needs and measure the value of advice at these key times. CPA Australia also undertook a quantitative survey of 1,244 consumers and 815 SMEs which focused on the emotional and intangible benefits that advice brings in addition to the financial benefits. And, in an Australian first, CPA Australia then modelled the economic impact of professional advice for the entire Australian population.

 

"I don't think we'd achieve it [goal] without them. No, we wouldn’t. Every time we meet with them it’s always, discussing the goal and how we’re tracking and so yeah, we’d never make it without them."
— SME on the value of advice

 

"Somebody telling us what we can do with our money that's sitting in our mortgage or with the equity that we have in our house. Or even like our savings and stuff, what we should be doing."
— Young family on the value of advice

Regulatory Burden Report

Contact us

We welcome further comments and insights from our members on all of our research activities. Please email us at  [email protected].