Consultancy Rice Warner has proposed a new advice model that it says will help take the under-pressure industry forward.

The proposal was outlined in a Future of Advice report that the consultancy has prepared for the Financial Services Council (FSC).

The report says the new model should provide simplification, affordability, accessibility, consistency and quality of advice.

It says the current setup is outdated, having been established at a time when conflicted remuneration was the norm and many products provided poor value to consumers.

Regulatory reforms over the past few years, such as raising educational requirements, has led to an exodus of advisers and discouraged new ones from joining. At the same time, fees have increased because of increased compliance costs while consumers believe it is too expensive in relation to what they perceive as value.

“Obviously, the poor brand image of the industry is partly to blame, but it is more than this,” Rice Warner says, referring to the misconduct findings from the Hayne royal commission.

“We have developed a heavily bureaucratic world and driven most Australians away from receiving valuable advice. We consider the current regulatory regime provides several barriers to consumers who need to or want to take advice.

“Our research and analysis show that the goals of improving financial advice and making it more accessible to Australians have failed despite 20 years of change driven by legislation.”

One of the proposed changes, which could also impact general insurance, concerns the definition of general advice.  It proposes a new classification of advice, splitting it between general information and personal advice.

The Insurance Council of Australia (ICA) has welcomed the FSC-commissioned report, saying it will add to the policy debate over provision of advice.

“We look forward to working with the FSC and other stakeholders to develop a consensus position to put to the [Australian Securities and Investments Commission] review of the quality of advice,” spokesman Campbell Fuller told insuranceNEWS.com.au.

The review is to be completed by December 31 2022, and Mr Fuller says the advice definitions in the Corporations Act “is an issue on which ICA has long been advocating reform”.

“ICA want general insurers to be able to have useful conversations with consumers about issues such as the appropriate level of home and contents insurance to take out without worrying that they’ve strayed into giving personal advice.”

The Advisers Association has also weighed in on the Rice Warner report, with CEO Neil Macdonald saying the current use of advice terms such as “general financial advice” and “roboadvice” are confusing for consumers.

“We also need to arrive at an appropriate term for people who provide financial information, particularly given that the terms ‘financial adviser’ and ‘financial planner’ are likely to soon be protected,” Mr Macdonald said.

“The new term must make it obvious to consumers that when, for example, they seek intrafund information from a provider, they will only receive information about that firm’s products.” He suggests an appropriate term might be ‘financial assistant’.

Click here for the Future of Advice report.