This week, the financial advice profession confronted a stark reality check, as regulators intensified their focus on adviser competence and conduct. In contrast, the adviser population recorded its sharpest decline of the year. ASIC issued a critical warning that nearly 30% of our profession remains non-compliant with mandatory education standards, creating an urgent existential threat with the January 2026 deadline looming. This regulatory crackdown is occurring against a backdrop of accelerating consolidation, where major firms are pursuing aggressive growth, signalling a deepening divide between a shrinking pool of advisers and the expanding scale of well-capitalised players.
Regulatory Pressures & Industry Response
This week, the regulatory environment was dominated by a clear and uncompromising message from ASIC: the time for compliance is now. In a bombshell announcement, the regulator revealed that 4,600 relevant providers are yet to meet the qualifications standard, urging AFS licensees to verify adviser records on the Financial Adviser Register or face consequences. This warning was coupled with a broader call for licensees to “step up” and even dob in misbehaving peers, signalling a zero-tolerance approach to misconduct.
This heightened scrutiny is particularly relevant to the Compensation Scheme of Last Resort (CSLR), with new analysis from Professional Planner showing that claims are disproportionately driven by small licensees with conflicted SMSF advice models. This finding directly links poor advice structures to industry-wide costs, reinforcing the regulator's focus on conduct.
Adding to the compliance burden, AFCA has taken a hard line on several fronts:
- It reaffirmed its position that the $10 million net asset test for wholesale investors applies to individual SMSF members, urging advisers to ensure clarity in their assessments.
- The FAAA has backed AFCA’s tougher stance on paid representatives in the complaint process, supporting efforts to streamline dispute resolution.
- There are growing calls for AFCA to "name and shame" non-compliant members, which could significantly impact the reputations of firms that fail to meet their obligations.
Meanwhile, the debate over the Delivering Better Financial Outcomes (DBFO) reforms continued, with the Super Consumers Australia (SCA) cynically dismissing super fund retirement advice as a "sales pitch" rather than genuine advice, highlighting ongoing tensions about the future scope of advice. On a technical note, APRA finalised targeted changes to treating HELP debts in its lending guidance, a small but important detail for advisers with clients seeking credit.
Practice Management & Growth
The narrative of a shrinking profession intensified this week, with adviser numbers seeing their biggest hit for 2025. This contraction creates a challenging environment for succession and sustainability, but also fuels the industry's powerful consolidation trend.
In starkly illustrating this trend, Shadforth Financial Group unveiled a dramatic plan to double in size, aiming to become a dominant force in the high-net-worth advice space. This ambition is mirrored by Findex, which also expands its senior leadership to support a significant M&A strategy. These moves underscore a clear divergence: while the overall number of advisers falls, large, well-resourced firms are aggressively expanding their footprint.
For practice principals, a recent court ruling provides a valuable lesson on the importance of well-defined employment contracts, after an advice firm’s non-compete clause was upheld, offering a precedent for protecting business interests. The perennial discussion around fees also continued, with an ongoing debate about the most ethical charging models and renewed calls from industry veterans for an 80/20 life insurance commission model to ensure the sustainability of risk advice.
Client Engagement & Retention
In a market defined by regulatory pressure and business model evolution, the core of our profession—delivering demonstrable value to clients—remains the ultimate measure of success. A key insight from this week reinforces that qualitative benefits are key to communicating the value of ongoing advice. Articulating the peace of mind, confidence, and clarity that advice provides is crucial, especially when clients remain confused by the distinction between general and personal advice.
The increasing complexity of the financial landscape means that deep technical expertise is no longer optional, with reports highlighting that technical skills are more important than ever, particularly when guiding clients through sophisticated areas like private market investments or navigating system glitches that can bar a superannuation recontribution strategy.
This week also celebrated excellence in our profession, with Brisbane adviser David Ornsby receiving the prestigious Gwen Fletcher Award for his outstanding contributions to financial advice, inspiring us all.
Technology & Innovation
As our profession grapples with efficiency and compliance demands, technology continues to offer a path forward. This week's most significant development was the announcement that an AI-based Statement of Advice (SoA) platform is ready for launch. Such innovations are no longer a novelty; they are a direct and necessary response to the immense pressures on adviser time and practice profitability. By automating parts of the document creation process, these tools promise to free up advisers to focus on high-value client interaction and strategic thinking.
The fintech ecosystem that supports our profession is also maturing and expanding. Padua announced it is bolstering its technical services capabilities with a new hire, demonstrating the growing demand for specialised technology and research support. These developments highlight a crucial trend: successful practices of the future will be those that effectively integrate technology to enhance, not replace, the human element of financial advice.
Context and Looking Forward
Current Significance
This week exemplifies the profession's dual reality: intense regulatory enforcement coupled with pragmatic relief acknowledging reform transitions. ASIC's aggressive stance against misconduct—from finfluencer crackdowns to multiple adviser bans—demonstrates zero tolerance for non-compliance. At the same time, the fee consent relief recognises the inefficiency of remediating soon-to-be-replaced frameworks. The FAAA's support for AFCA's "name and shame" powers signals professional maturity, embracing accountability measures that protect the sector's reputation. This enforcement intensity occurs against the backdrop of 4,604 advisers still failing to meet January 2026 qualification standards, creating an existential compliance crisis amid robust M&A activity and technological advancement.
Forward Outlook
The January 2026 qualification deadline looms as the most significant single threat to adviser capacity since the Royal Commission, potentially triggering departures that could push numbers below 12,000, devastating for accessibility. However, this crisis may accelerate industry transformation, with AI-enabled practices (74% adoption rate) positioned to absorb displaced client relationships through enhanced capacity. The tax deductibility breakthrough provides surviving practices with crucial tools to demonstrate value and improve affordability. Intergenerational wealth transfer opportunities will intensify as beneficiary dissatisfaction creates openings for proactive advisers. Political uncertainty around DBFO implementation will persist, but successful practices will focus on leveraging technology and family engagement strategies to capture growth opportunities. At the same time, the sector consolidates around scale and capability advantages.
Article by:
Comments1
"Advisors continue to vote with their feet (and leave the industry), and ministers continue to fail to address the advisor exodus with sound policy settings. "
Mario Fish 18:07 on 25 Jun 25