In summary, the proposed benefits of the reforms are:

  • adviser interests will become aligned with client interests, leading to more client-focused advice and greater adviser engagement with clients;
  • product recommendations will not be influenced by commissions given to advisers by product issuers;
  • clients will be less likely to suffer detriment as a result of excessive fee arrangements or sub-optimal investment strategies;
  • a more competitive advice market;
  • greater availability of advice;
  • advisers will be discouraged from recommending imprudent investment strategies, for example, strategies that rely heavily on borrowed funds;
  • a reduction in product fees which will result in significant savings for consumers; and
  • less rogue advisers in the industry….assuming there are many rogues!

Consumers are the primary focus of the reforms and the Government believes that consumers will greatly benefit from a structural change in the financial advice industry in a way that will outweigh the implementation costs to industry.  Overall, the quality of financial advice will improve, leaving Australians better equip to make decisions about their finances.