Quality of Advice Review: A game-changer for financial advice

The recommendations of the Quality of Advice Review (QAR), if implemented, could result in the biggest changes to the financial planning industry since the Future of Financial Advice reforms more than a decade ago. The government recently provided their response to the recommendation, giving advisers their first insights into what the new regulatory framework could look like.

In this article, we provide a brief recap of the review and extrapolate what this might mean for the industry.

The rising importance of advice

With an ageing population, retirement and investment planning is more important than ever before. Stream one of the announced accepted reforms seems aimed at ensuring the costs of advice stay at a level that remains accessible to as many consumers as possible.

As it stands currently, only around 10% of Australian adults are accessing advice. Betashares’ research demonstrated why some of the QAR changes are needed, with 85% of respondents supporting at least some of the QAR initiatives and 57% believing that the changes will make advice more accessible. It’s not surprising that over half of the respondents have actively turned away prospective clients in the last 12 months.1

Let’s examine the stream one reforms in more detail to see where the real benefits lie.

Simplifying fee disclosure

The stream one reforms include consolidating three fee documents into one simplified document. This was an area of reform called out by advisers, with 73% identifying the requirements to prepare and provide disclosure documents as a problem area.

Currently advisers must provide a fee disclosure statement, a renewal agreement and a consent form for the deduction of fees from a financial product. Under the proposed changes the fee disclosure statement requirement would be removed, with the remaining disclosure statements to be consolidated into one standardised consent form.


This would be hugely beneficial for advisers. As things stand, an adviser with a retiree couple as clients may need to complete up to five or six forms per year focused on fee disclosure (separate forms are required for pension and investment products). Forms can also vary in format depending on the product provider concerned.

While disclosure is necessary and healthy, disclosure in varied forms can have the opposite effect on consumers, making them wary and leading to delays in implementation. The costs of this excessive administration burdens have been passed onto consumers with the average cost of advice now hovering around the $5,000 mark.

Chalk this change up as a big win, with a reduction in paperwork and administration, and less confusion for clients.

Fixing Statements of Advice

The next big change would be the proposed replacement of SOAs with financial advice records that are fit for purpose. Consultation with the industry will be sought on the final design of the replacement.

SOAs can be lengthy and may not be correctly understood by clients. The fear of legal and regulatory action has arguably prompted advisers and licensees to construct SOAs with more of a regulatory compliance focus. This ignores the intended concept of SOAs – to convey the value and nature of advice given in a simple and easy to understand way. It’s also led to one in three clients skimming through (at best) an SOA when presented.

On current estimates it takes between 6.6 to 14.6 hours to prepare an SOA and runs to over 41 pages in length.


Replacing SOAs would beneficial for both advisers and consumers. AFCA estimates an SOA should be 20 pages or less. A shorter document will be more likely to be read by consumers and should lead to a reduction in implementation fees.

With less time spent on document production, advisers may be able to see more clients, including those with lower balances. Reviewing document production should encourage innovation in the way information is relayed to consumers, making it far more interactive.

Bon voyage to safe harbour provisions

Another important proposal is the removal of the safe harbour steps from the Best Interest Duty (BID).

Of course, every client is entitled to expect that their financial adviser will operate with their best interests at heart. But in addition to being enshrined in the code of ethics, the BID and safe harbour provisions are part of the Corporations Act.

It has been argued that the BID and safe harbour provisions are more concerned with viewing the actions taken by the advice provider in the formulation of the advice, rather than whether the substance of the advice is actually in the best interests of the client. This arguably leads to advisers relying on a box ticking approach to satisfy their duties.

It should be noted that safe harbour is merely one way of satisfying the BID, so it can lure advisers into a false sense of security. A focus on outcomes rather than process is a big win for the industry.

A sensible approach to FSGs

Finally, increased flexibility is proposed for the provision of the FSGs.

While most advisers are adept at providing FSGs, it doesn’t necessarily mean they serve a real purpose beyond being another method for discharging disclosure obligations.

Consumer feedback suggests that FSGs are rarely read thoroughly by most consumers. One can imagine they are often disposed of quickly. It might be easier for advisers to make this information available on their website.

Outcomes trump processes

Reducing administrative burdens and focusing on outcomes rather than processes seems like good business for government, regulatory bodies and consumers alike. Like any major reforms, there will be some hiccups and unintended consequences expected early on. But realistically, most would say these reforms are long overdue. Consumers are nearing retirement en masse and with larger sums of money, so making advice more accessible is critical.

All-in-all, the proposed changes show a willingness by the Government to trust that the financial planning industry now has the capacity to somewhat self-regulate . No one should forget that this transition has been hard earned by lifting adviser education and ethical standards.

1. Survey took place over May 2023. The survey elicited 144 eligible, complete responses from financial advisers.

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Written by

Damon Riscalla

National Head of Practice Development helping advisers to enhance client value and develop their businesses. Over 26 years’ experience working with financial planning practices, with qualifications including a Diploma of Financial Planning and a Grad Dip in Applied Tax and Financial Planning.

Read more from Damon.


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