This week in financial advice, the profession faced a watershed moment as regulatory enforcement reached a new zenith with ASIC launching a landmark lawsuit over cybersecurity failures. The action intensified the immense pressure on a sector already grappling with the fallout from a record number of client complaints and an adviser exodus that key industry bodies warn is now a critical threat to the nation's retirement savings. Against this backdrop, urgent calls for government intervention and reform have unified the advice and accounting professions, demanding a sustainable path forward before the advice gap becomes an unbridgeable chasm.
Regulatory Scrutiny Reaches Fever Pitch with Cyber Lawsuit
The regulatory environment escalated dramatically this week, culminating in the Australian Securities and Investments Commission (ASIC) suing Fortnum Private Wealth over alleged cybersecurity deficiencies. The regulator claims that a 2023 cyberattack, which exposed the personal information of thousands of clients, was the result of Fortnum failing to have adequate cybersecurity systems and risk management processes in place. This legal action represents a significant step-up in ASIC's expectations, moving beyond guidance to direct enforcement and signalling that cyber resilience is now a fundamental and non-negotiable compliance obligation for all licensees.
This intensified focus was reinforced as the Australian Financial Complaints Authority (AFCA) revealed it had received over 100,000 complaints in the 2024-25 financial year, with a concerning 18% jump in complaints related to financial advice. AFCA directly linked the surge to large-scale failures, flagging the impending cost impact of collapses like the Shield Master Fund and First Guardian. The human toll of these collapses was further highlighted as a court extended a travel ban on an adviser tied to the failed firms, citing a risk he might not return to face the consequences.
ASIC's enforcement was also visible at the grassroots level, with the regulator issuing infringement notices to two AFS licensees for allowing advisers to provide advice while unregistered. Meanwhile, AUSTRAC unveiled its 2025-26 priorities, signalling a continued crackdown on financial crime that will keep pressure on licensees' compliance frameworks.
An Industry Unites Against Adviser Exodus
The ongoing decline in adviser numbers has officially reached a crisis point, prompting a unified call to arms from the financial advice and accounting professions. CPA Australia raised the alarm, warning that the exodus of experienced professionals poses a direct threat to the retirement outcomes of millions of Australians. This warning was substantiated by data showing that while the number of Certified Financial Planner (CFP) professionals grew globally, Australia experienced a decline, underscoring the severity of the local challenge.
In a continuation of the united front which has developed over the last 5 years, the accounting and advice bodies are continuing to jointly urge the government to take immediate action to stem the losses and create a sustainable policy environment. Their advocacy is directly aimed at the ongoing Delivering Better Financial Outcomes (DBFO) reforms. In a detailed submission on the second tranche of the reforms, the Association of Superannuation Funds of Australia (ASFA) pushed for greater clarity on how the new "not conflicted advice" framework will interact with the existing best interests duty, a critical detail for the future of scaled advice. Despite the grim overall numbers as the financial year ended, the industry saw a brief positive flicker with a surge of new entrants in the first weeks of the new financial year. However, this did little to offset the significant losses from the previous month.
Innovation and Client Needs in the Crosshairs
Amid the turmoil, the industry’s focus on client outcomes and innovative solutions has sharpened, driven by regulatory change and demographic shifts. New research from the Council of Australian Life Insurers (CALI) revealed a stark advice gap for younger Australians, who are motivated to seek advice but are effectively locked out by cost and complexity. This highlights a generational challenge for the profession, which must find new ways to engage and serve this cohort.
The immense value of professional guidance was quantified in a new Vanguard study, which found that comprehensive advice significantly improves retirement outcomes, providing a powerful proof point for the profession. At the same time, advisers are navigating the practical impacts of new legislation, with the Division 296 tax on super balances over $3 million driving an urgency around estate planning and prompting a rethink of insurance structures within SMSFs.
In response to these pressures, product innovation and partnerships are accelerating. MLC announced a partnership with retirement technology provider Comentem to deliver new solutions for advisers. At the same time, HeirWealth, a goals-based advice platform, inked a deal with boutique Sydney firm Lumos Private Wealth. On the personnel front, former Bravura CEO Libby Roy has joined the board of AZ NGA, bringing significant technology and leadership experience to the growing consolidator.
Context, Looking Ahead & Takeaways
This week’s events are a direct and consequential continuation of the "bifurcation" narrative that has defined the advice profession throughout 2025. The dual pressures of intense regulatory enforcement and the consequences of past failures are now undeniable. ASIC’s landmark cyber lawsuit against Fortnum and AFCA's report on skyrocketing complaints have made the abstract threat of compliance failure terrifyingly concrete. This pressure is the primary catalyst for the adviser exodus, which in turn fuels the consolidation trend as only well-capitalised firms can absorb the rising costs and complexity.
Looking ahead, the Fortnum case will be a defining moment, setting a new legal precedent for cybersecurity liability across the entire financial services sector. The industry’s unified call for government action on adviser numbers and the DBFO reforms now places the ball firmly in the government's court. For individual practices, the pressure to demonstrate value, manage risk, and operate efficiently has never been higher.
Key Takeaways:
Short-term (0–3 months): Practices must immediately review and bolster all cybersecurity controls, documentation, and incident response plans. The ASIC lawsuit against Fortnum has established a new and much higher bar for regulatory expectations.
Proactively communicate your value to clients, using research like Vanguard's report on improved retirement outcomes to reinforce the benefits of advice and justify fees in a market saturated with negative headlines about complaints and costs.
Medium-term (3–12 months): Practice principals face a critical decision point. With the adviser exodus reshaping the competitive landscape, firms must commit to a clear strategy of scale, specialisation, or succession. Standing still is no longer a viable option.
All firms must develop a clear strategy for engaging younger clients. The advice gap identified by CALI represents both a market failure and a significant growth opportunity for practices that can create accessible and relevant service models.
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Comments1
"Keep up the good work ASIC. With an estimated 2600 advicers departing in December, in no time you will have no advisors left to regulate and by default no failures or complaints. "
Mario Fish 15:20 on 23 Jul 25