The financial advice profession stands at a critical juncture as our industry grapples with persistent challenges around adviser numbers, regulatory compliance, and political uncertainty. This week brought significant developments across multiple fronts: a major Coalition shadow ministry reshuffle that removes experienced financial services advocate Jane Hume, urgent ASIC warnings about looming education standards deadlines, and breakthrough guidance on tax deductibility of advice fees. With 4,604 advisers still failing to meet qualifications standards and the January 2026 deadline approaching rapidly, our profession faces an immediate compliance crisis even as practice valuations and M&A activity continue to surge, creating a stark contrast between regulatory pressure and market confidence.
Regulatory Pressures & Industry Response
The regulatory landscape intensified dramatically this week, with ASIC issuing fresh warnings to AFS licensees about the alarming number of advisers who have yet to meet education standards. Of the 15,610 relevant providers on the Financial Adviser Register, 4,604 have yet to meet the qualifications standard ahead of the critical January 1, 2026, deadline. ASIC’s latest spot check revealed widespread inaccuracies in register data, including advisers incorrectly claiming experienced provider pathway eligibility and qualifications marked as complete when courses remain unfinished.
The regulator’s stern warning carries serious implications, emphasising that knowingly providing false information constitutes a serious offence. After January 2026, ASIC will launch a comprehensive compliance program relying on register records to determine ongoing authorisation eligibility. This represents an immediate existential threat for nearly 30% of our profession.
Meanwhile, the political landscape shifted dramatically with the Coalition’s comprehensive shadow ministry overhaul. Pat Conaghan has been appointed shadow financial services minister, replacing the experienced Jane Hume, who was dumped entirely from the front bench. Conaghan, a former NSW police officer and prosecutor with no economics background, faces the challenge of developing credible financial services policy ahead of the next election. The appointment of Ted O’Brien as shadow treasurer, despite limited economics committee experience, signals a fresh but potentially inexperienced approach to financial services policy development.
Industry bodies responded with practical solutions, as the FAAA released comprehensive guidance on tax deductibility of advice fees. Developed with CA ANZ, CPA Australia, and IPA, this guidance provides practical implementation pathways for ATO Tax Determination TD 2024/7, enabling clients to legitimately claim portions of initial advice fees for the first time. FAAA CEO Sarah Abood emphasised that this follows six years of advocacy efforts and represents a significant win for advice accessibility.
Practice Management & Growth
The practice management landscape demonstrated remarkable resilience amid regulatory uncertainty, with M&A activity reaching new heights. LGT Crestone completed its major acquisition of Commonwealth Bank’s high-net-worth advisory business, bringing approximately $5 billion in assets under advice and 38 professionals into the firm. The deal achieved an impressive 93% client retention rate, highlighting the value sophisticated clients place on quality advice relationships. This transaction expanded LGT Crestone’s assets under advice to $40 billion, with over 138 advisers operating nationally.
However, underlying adviser numbers continue to present challenges. WealthData analysis revealed that while 48 advisers changed status during the reporting period, only four new entrants joined the profession, resulting in a minimal net gain of just one adviser. The current adviser count stands at 15,601, representing stabilisation rather than growth. This data underscores the profession’s struggle with replacement rates, as high levels of inter-licensee movement mask the absence of meaningful new entrant numbers.
The consolidation trend continues accelerating, with multiple licensee groups showing net gains through strategic acquisitions rather than organic growth. Perpetual gained two advisers from Ord Minnett Group, while Partners Wealth Group added advisers through returns to the profession and strategic moves. This pattern reflects the maturing advice market where scale and capability increasingly determine competitive advantage.
Practice valuations remain robust despite regulatory pressures, suggesting sophisticated buyers recognise the long-term value proposition of quality advice businesses. While burdensome in the short term, the professional development requirements create barriers to entry that may ultimately benefit existing practices through reduced competitive pressure.
Client Engagement & Retention
Client-centricity took centre stage this week by releasing practical guidance enabling tax deductibility of advice fees. The comprehensive guide includes three potential methodologies for apportioning fees, a statement of advice templates and practical examples. This development addresses a fundamental accessibility barrier, enabling clients to claim legitimate tax deductions for financial advice services.
Research highlighted growing client demand for accessible advice amid ongoing economic hardship, with many Australians calling for simplified advice delivery mechanisms. The industry increasingly recognises that the traditional “all things to all people” advisory model is becoming economically unviable, with cost-to-serve calculations exceeding $4,000 per client for comprehensive services.
Specialist service delivery models are gaining traction as practices seek sustainable ways to serve broader client segments. The collaboration between financial advisers and accounting professionals on tax deductibility represents a positive template for multi-disciplinary service delivery that enhances client outcomes while managing compliance complexity.
Digital engagement strategies continue evolving, with practices investing in technology solutions that enhance client communication while reducing administrative burden. The focus has shifted from purely regulatory compliance to value-added services that justify fee structures and improve client retention in an increasingly competitive market.
Technology & Innovation
Technology adoption accelerated across multiple fronts as practices seek efficiency gains amid regulatory pressures. AI and automation initiatives are specifically designed to lighten administrative loads for advisers, enabling focus on high-value client interaction and strategic advice delivery. These developments are critical as practices struggle with compliance costs and adviser capacity constraints.
Platform innovation continues with major providers launching scalable solutions designed specifically for advisory practices. Mercer’s latest platform emphasises scalability and tailored approaches, recognising that advisers need technology solutions that can grow with their practices while maintaining service quality.
Integrating compliance technology with practice management systems is becoming an essential infrastructure rather than an optional enhancement. Practices increasingly recognise that technology investment is crucial for managing the complex regulatory environment while maintaining profitability and service standards.
However, technology adoption must balance efficiency gains with the human-centred nature of financial advice. The most successful implementations enhance rather than replace the advisor-client relationship, using automation to handle routine tasks while freeing advisers to focus on complex planning and relationship management activities that deliver genuine value to clients.
Other News
In other parts of the industry, the following news made headlines this week:
The investment landscape showcased significant innovation and growth this week. BlackRock Australia confirmed plans to launch its first actively managed ETF, the iShares US Factor Rotation Active ETF (IACT), targeting a mid-June ASX listing with 0.45% annual fees. The ETF aims to outperform US markets through tactical allocation across six return drivers. Meanwhile, Betashares achieved a major milestone, reaching $50 billion in funds under management, with ETF assets growing 56.9% annually since its 2010 launch, significantly outpacing the industry’s 31.5% growth rate. However, the Financial Services Council pushed back against additional regulatory burden on private market investments, arguing superannuation funds need flexibility across public and private markets.
Superannuation funds navigated challenging market conditions with total assets declining 0.8% to $4.1 trillion in the March quarter, recording a $20.9 billion quarterly loss despite annual investment income of $148.98 billion. However, longer-term performance remained resilient with 5.9% returns for the year to March 2025 and 8.1% five-year annualised returns. Member engagement strengthened significantly, with total contributions rising 14.4% to $202.8 billion annually, driven by 10.3% growth in employer contributions and a 26.9% surge in member contributions. Australian Retirement Trust faced regulatory action, paying an $18,780 infringement notice for publishing outdated performance data. The private markets debate intensified as industry funds defended increasing allocations to unlisted assets for diversification and income generation.
The life insurance sector confronted significant regulatory enforcement action. ASIC launched legal proceedings against Choosi for allegedly misleading customers through its comparison services, claiming to compare multiple insurers while only offering single-provider policies. The alleged misconduct involved 4,225 funeral and 9,478 life insurance policies, generating $61 million in commissions. ASIC emphasised that comparison websites must provide meaningful services rather than operate as mere distribution channels. Industry digitalisation progressed with new digital personal medical attendant reporting systems promising streamlined processing. The sector grappled with ongoing total and permanent disability benefit sustainability concerns while pursuing strategic consolidation through personnel movements and acquisitions. Regulatory focus intensified on transparency and consumer protection, particularly comparison services and digital platforms.
ASIC delivered damning findings from its comprehensive compliance plan review, assessing 50 plans covering nearly $1 trillion in managed investments. Most plans failed to adequately address design and distribution obligations, internal dispute resolution, and reportable situations requirements, with some unchanged since the 2021 DDO implementation. The Fair Work Commission delivered a 3.5% national minimum wage increase to $812.60 weekly, effective July 1, 2025, impacting superannuation guarantee calculations. Political developments included major Coalition shadow ministry changes, appointing Ted O’Brien as shadow treasurer and Pat Conaghan as shadow financial services minister, signalling fresh policy approaches despite limited economic backgrounds. Professional associations expressed concern about ASIC’s enforcement tactics, with SIAA opposing “naming and shaming” approaches to dispute resolution failures.
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Comments1
"Adviser ratings must have a different perspective than the one I hold. Jane Hume was not an "experienced financial services advocate" She was yet again another unmitigated disaster from the Coalition as a Financial Services Minister following in the tradition of Frydenberg himself and then O'Dwyer. Not a proud record . Shhe was responsible for both the ASIC levy and the CLSR levy. About the only thing she did of any value was to commmission Michelle Levy"
Bill Brown 16:56 on 04 Jun 25