Pandemic heightens need for trusted financial advice

The COVID-19 pandemic and a changing financial market reinforces the need for trusted advisers, says financial services minister Jane Hume.

In an address to the annual Stockbrokers and Financial Advisers Association Conference, Senator Hume said guidance was often a prerequisite for building confidence to invest in the share market, with a recent Australian Securities Exchange survey finding that 17 per cent of Australians were more likely to seek advice in the wake of the pandemic.

Read more: Do you need financial advice?

“Women are more likely than men to want to seek advice before they invest in the stock market,” Senator Hume said.

“And those who already had advice used it: 68 per cent of advised investors made changes to their portfolios in response to the pandemic.”

High-quality, informed advice is important, says the minister, but it also needs to be accessible and affordable. The rise of digital advice may be an effective way to reduce costs and increase the scope of trusted advisers.

She says such a change requires a review of regulatory settings as they were put in place for traditional in-person advice. Hybrid adviser-technology models and pure technology-driven digital advice models also need proper regulation.

“No-one has yet cracked the nut of true full-service digital advice, but looking at how fast technological developments have occurred in other industries, I have no doubt that it will only be a matter of time before low-cost digital advice is widespread,” Senator Hume said.

Read more: Financial advice in dire state: report

“That doesn’t mean that advisers will lose their importance; on the contrary, they will continue to play a key role.

“Many things that machines find extremely hard come naturally to humans.”

The financial system is continually maturing and changing with new products becoming available.

The government has said it would not stand in the way of those who wanted to invest in ‘riskier’ markets, such as cryptocurrency.

“We have to back Australians to be sensible enough to judge for themselves whether to put their hard-earned money into higher-risk assets,” Senator Hume said.

“It’s about personal responsibility and common sense, and that extends to new asset classes like cryptocurrency.

“They are volatile. They are digital. And, dare I say, they are often poorly understood.

“But they are also going to play a significant role in our economy, so today I would like to make something clear: cryptocurrency is not a fad; it is an asset class that will grow in importance.

“Participants in financial markets – including advisers and stockbrokers – are venturing into cryptocurrency in response to client interest.

Read more: Where to access, free, confidential financial information

“We take no issue with consumers investing in cryptocurrencies. But like investment in any asset class, they are subject to Australian law, including our market conduct, know-your-client and tax laws. It is not a free pass.

“We have safety nets to catch people when they fall, but we will not stop them from having a crack at climbing the mountain.”

Do you have a financial adviser? Would you invest in riskier markets such as cryptocurrency?

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Written by Ellie Baxter

Writer and editor with interests in travel, health, wellbeing and food. Has knowledge of marketing psychology, social media management and is a keen observer and commentator on issues facing older Australians.

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