This week marked an inflection point for the Australian financial advice sector, with promising adviser number growth coinciding with significant regulatory actions and industry concerns about the adequacy of current reforms. The Financial Advice Association Australia (FAAA) and The Advisers Association (TAA) have raised serious concerns about the legislative implementation of DBFO, while ASIC continues its enforcement focus. Against the backdrop of post-election uncertainty, advisers are navigating evolving client preferences and challenging remuneration structures, particularly in risk advice. These developments unfold while markets respond cautiously to the recent federal election results.
Regulatory Pressures & Industry Response
With the election having resulted in a resounding victory for Labor, the profession's focus has turned back to jockeying for position, as well as a call to implement DBFO urgently. Associations have used their DBFO Tranche 2 submissions to express significant disappointment with recent regulatory developments. The FAAA has highlighted the risks of a number of proposals, including the complexity of retirement advice and recommended further opportunities to simplify advice delivery to reduce costs for consumers. The Advisers Association (TAA) delivered a scathing assessment of the DBFO Tranche 2 reforms, stating they "fall well short" of addressing the industry's core concerns. TAA CEO Neil MacDonald emphasised that the reforms have failed to deliver on the intent to reduce the cost and complexity of providing advice.
On the other hand, it has been business as usual at ASIC, which maintained its enforcement momentum this week, cancelling the Australian Financial Services License (AFSL) of Brite Advisors Pty Ltd due to failures in maintaining competence and adequate resources. The regulator determined the firm had inadequate compliance arrangements and supervision of representatives. In a separate action, ASIC issued a five-year ban to a Western Australian adviser for providing unlicensed advice while employed at a registered tax agent firm after they had recommended that clients establish SMSFs and make property investments without proper authorisation.
A notable development in superannuation advice emerged with the Financial Services and Credit Panel (FSCP) issuing an order regarding non-concessional contributions, clarifying responsibilities for advisers when guiding clients through complex superannuation strategies.
Practice Management & Growth
The advice profession received welcome news with confirmation that adviser numbers have continued their recovery trend with a net increase of 41 advisers over April 2025, returning to over 15,600 for the first time in the last year. This represents the first substantial quarterly growth in years, indicating that the profession has begun to recover from the exodus following the implementation of the FASEA education standards. Despite this, the Stockbrokers and Investment Advisers Association (SIAA) has raised concerns that declining adviser numbers negatively impact private market participation, reducing Australian investors' access to diversification opportunities through placements and capital raisings.
There were also some concerning findings regarding adviser remuneration practices at some firms. A recent investigation revealed that certain licensees have offered steep bonuses to advisers who provide standardised "cookie-cutter" advice, raising questions about client best interest practices.
In the risk advice space, a Risk Info poll indicated growing acceptance among advisers for fee-for-service models, with many now believing risk advice fees are achievable in the post-LIF environment.
Client Engagement & Retention
Research released this week provides important insights into Generation Z consumer behaviour, revealing they place significantly higher trust in personal recommendations than established brands. This finding has substantial implications for advice practices' marketing strategies, suggesting word-of-mouth and referral programs may be more effective than traditional brand-building for attracting younger clients.
The ongoing challenges in life insurance advice continue to pose problems for clients' risk protection needs. Industry leaders issued a call to action to address what they described as the "burning platform" of life insurance advice accessibility, with particular concerns about declining coverage rates among Australians.
Technology & Innovation
Superannuation administrators were cautioned this week against practices that collectively bill members for externally-provided advice services. The guidance emphasised the importance of transparent fee structures and avoiding charging members who don't receive specific services, highlighting the growing scrutiny around technology-enabled fee collection systems.
A renewed focus on ethical practices is emerging as a competitive differentiator in advice. Technology solutions enabling transparent demonstration of ethical decision-making are gaining traction, with industry leaders urging advisers to implement systems that document adherence to ethical frameworks beyond mere compliance requirements.
Financial Product Updates
Australian financial products are experiencing significant evolution amid market volatility and regulatory shifts, with managed accounts emerging as a standout performer in a $200 billion market. Product innovation continues with VanEck's launch of pioneering RMBS and India Growth ETFs, transforming the ETF landscape. At the same time, NGS Super has partnered with Challenger to introduce a lifetime income product addressing retirement security demands. The retirement solutions sector is seeing strategic consolidation as evidenced by TAL's acquisition of a 15.1% stake in Challenger for $540 million, signalling a pivot beyond traditional life insurance products. Cybersecurity concerns have impacted product providers, with major superannuation funds including AustralianSuper, REST, MLC Wrap, and Cbus reporting breaches or suspicious activity, revealing vulnerabilities in digital infrastructure. Meanwhile, ASIC continues to shape the product landscape through enforcement actions, including an $11 million penalty against a provider for inappropriate SMSF property advice, while planning increased transparency with public reporting of breach and complaints data for financial services licensees.
The Current Context
The financial advice profession sits at a pivotal inflection point as the federal election approaches. After years of declining adviser numbers following the Royal Commission and regulatory reforms, stabilising around 15,600 advisers marks a significant turning point. While the Coalition's ambitious target of 30,000 advisers signalled a potential sea change in how government views the profession, the victory of Labor in the election represents a form of status quo. Whether DBFO in its proposed form will transform the currently constrained sector to solve the expansion needed to address Australia's advice gap is yet to be seen. Meanwhile, the ongoing CSLR controversy represents the culmination of years of regulatory cost increases that have fundamentally altered the economics of advice delivery. This tension between expansion ambitions and regulatory burden exemplifies the industry's central challenge: balancing professional standards with accessibility.
Forward Outlook
The election outcome has determined the profession's regulatory path, with the outcome being continued incremental reform, a continued need for more sweeping changes to education requirements, a rework of the CSLR structure, and a continuation of current regulatory oversight. Regardless of the election outcome, three trends will continue shaping the landscape: practice consolidation as "super firms" emerge through private equity backing; increasing cybersecurity pressures as regulation intensifies and threats evolve; and AI integration accelerating capacity for client service. Advisers should continue focusing on what remains constant – the growing demand for quality advice amid intergenerational wealth transfer and retirement planning complexity. The coming months will reveal whether the profession has reached its turning point toward sustainable growth.
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