Summary - 459 Andrew Inwood

In the constantly shifting landscape of financial services, professionals across the globe wrestle with the dual challenge of meeting clients’ ever-changing needs while upholding the highest standards of professionalism and ethics. From rising regulatory burdens to questions about trust and long-term sustainability, the sector has become a microcosm of wider socio-economic shifts. In this article—synthesized from a conversation with industry expert Andrew Inwood of CoreData—we explore the current state of financial advice, how evolving demographics are reshaping needs, and how trust, professionalism, and ethical conduct can pave the way for a stronger, more consumer-centric future.

1. The Role of Financial Advice in Modern Economies

Financial advice has never been more necessary—or more complex. As Andrew points out, modern markets are much like intricate ecosystems: they bring together high net worth individuals, mass affluent families, and everyday workers who trust professionals to help them navigate retirement savings, investments, and day-to-day financial decisions. On the supply side, there are fund managers, banks, superannuation funds, technology providers, and advisory firms. On the demand side, there are consumers—some uncertain, some highly knowledgeable, all trying to protect and grow their capital in ways that can support them during and after their working years.

The conceptual backbone here is the idea that “surplus labor” or “unused excess labor” can be strategically invested to yield better outcomes than if funds merely sat idle. This matters not just for individual household wealth-building, but for broader socio-economic health. Indeed, each person’s investment choices, no matter how small, collectively shape the direction and health of financial markets. Consequently, the role of the financial adviser has expanded beyond product recommendation. Advisers today must interpret market shifts, regulatory changes, and technology trends, distill them into useful guidance for clients, and uphold ethical standards in an industry often under intense public and governmental scrutiny.

2. Trust and Professionalism Post-Royal Commission

In Australia specifically, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (often referred to as the Hayne Royal Commission) brought to light numerous cases of improper conduct and subpar professional standards. Public trust plummeted in its immediate aftermath, giving rise to popular skepticism around the value and integrity of financial advice. Andrew, however, notes a marked rebound. According to CoreData’s research, trust in financial advisers is now around 5.9 out of 10—a notable improvement from the dismal lows of two out of 10 soon after the Commission’s findings were released.

While a trust rating hovering near six out of 10 may not sound stellar, these levels of trust are on par with, and sometimes surpass, other professional services such as accountancy and law. In contexts involving large sums of money, and after a period of intense negative media coverage, returning to pre-Royal Commission levels of trust is significant. It also places the onus firmly on advisers and their organizations to keep that trust trending upwards. Part of that responsibility lies in consistent professionalism and a commitment to ethical guidelines and transparency.

3. Ethics as the Cornerstone of Client Relationships

Financial advice is a deeply personal service. Clients open up about their financial fears, dreams, and realities in a way that can make them vulnerable. This vulnerability underscores the ethical framework essential to sustaining a healthy adviser-client relationship. At its best, ethical practice means:

1. Clear, Client-Centric Communication: Rather than filling meetings with industry jargon, professionals need to present realistic scenarios in accessible language. This is particularly important when clients are approaching retirement, navigating mortgage complexities, or deciding on sensitive matters such as life insurance and estate planning.
2. Transparent Fee Structures: For clients to trust that an adviser is acting in their best interests, transparency in fees, commissions, and overall compensation is non-negotiable. A major driver of post-Royal Commission reform was the criticism that many advisers were incentivized to place clients into products that weren’t always fit for purpose.
3. Ongoing Education and Fiduciary Duty: Ethics is not a static code. Continued professional development ensures advisers remain current with new regulations, economic changes, and industry best practices. Additionally, acting in a fiduciary capacity—putting the client’s interest first—remains key to maintaining credibility in an evolving market.

Overall, public scrutiny has honed the industry’s focus on these ethical principles, but the core premise remains: the best advice delivers tangible benefits to clients, fosters a sense of financial security, and aligns with the highest standards of professional integrity.

4. Superannuation Funds: The Next Frontier in Advice

A distinctive piece of Australia’s financial landscape lies in its superannuation system. Enforced by the Superannuation Guarantee, individuals accumulate retirement savings throughout their working lives, typically contributing a set percentage of their salary. This creates one of the world’s most robust retirement funding structures, yet it also leads to massive administrative and advisory complexity.

Andrew highlights that superannuation providers—both industry and retail funds—are increasingly aware of their advisory “gap.” In other words, as members approach retirement or face critical life changes, they frequently have questions that extend beyond product features. They need genuine, holistic financial advice. Most large funds, however, are not historically built for high-touch, individualized engagement. Many relied on inertia (members being largely disengaged yet forced to contribute) for stable asset growth.

Now, demographic trends are forcing a shift. As baby boomers retire en masse, their frequency of contact with super funds is rising. In many cases, interactions revolve around fund access, drawdown strategies, retirement planning, and potential re-entry into the workforce. This intensified engagement leaves some fund members disappointed by the service experience, leading to a decline in trust for certain providers.

Ethical Considerations:

• Super funds that choose to offer limited or intra-fund advice must strike a balance between acting in their members’ best interests and promoting their in-house products.
• If a fund is not well-equipped to serve a member’s holistic needs, they may encourage the member to seek independent advice. Doing so transparently shows professional prudence and ethical consideration, acknowledging that no single provider has all the answers.

5. Demographic Shifts and Their Ethical Implications

An essential point that Andrew raises is how demographic and socio-economic shifts shape the advice industry. One of these shifts is the trend that home ownership—once considered foundational to a secure retirement—may no longer be guaranteed for a sizable segment of the population. When superannuation balances become the largest or only significant asset a person has, many of the traditional retirement models no longer hold.

Emerging Ethical Challenges:

1. Housing Security vs. Investment Goals: Advisers must carefully guide clients in deciding whether to divert super funds to a mortgage, or whether to keep investments diversified. Each situation has ethical implications if an adviser overlooks risks or fails to inform clients about the pitfalls of poor housing security in older age.
2. Punctuated Retirement Patterns: Individuals are no longer always retiring at a fixed age. Instead, they may step out of work to care for family, dip back into the workforce, move from full-time to part-time, or retire for a few years before returning to work. This stops-and-starts model complicates the timing of superannuation withdrawals. Advisers must keep pace with these individualized life paths, ensuring that a client’s shifting needs are always put first.
3. Societal Pressure and Age Pension Constraints: Current age pension settings strongly favor those who own a property. This disparity may become an ethical and political flashpoint. Discussions around tax reform or means-testing of property assets could emerge, adding more complexity and uncertainty to advice. Professionals must navigate these changes with unwavering transparency, making sure clients understand future legislative risks.

6. Global Comparisons: What We Can Learn

Australia is by no means alone in grappling with how best to blend robust regulation, consumer protection, and efficient distribution of advice. Several international models offer lessons:

1. United States: Home to vast providers like Vanguard and a sophisticated network of Registered Investment Advisers (RIAs), the U.S. advice industry shows the power of “target-date” communications and highly personalized digital touchpoints. Some U.S. retirement funds actively send out milestone prompts, encouraging members to check in at critical ages (e.g., 55, 60, 65). While not perfect, these strategies reveal how proactively customized communication can strengthen overall trust.
2. United Kingdom: The U.K. also introduced stronger emphasis on “value-for-money” communications and has worked to simplify the complex layers of pension regulation. Similar to Australia, the U.K. has faced trust deficits, but targeted engagement strategies show promise in bridging knowledge gaps.
3. Europe (Germany, France, Italy): Certain European nations emphasize state-supported pensions, but private advice is still crucial. Germany, for instance, has integrated digital tools to streamline client communications. However, cultural differences can significantly impact how advice is perceived. Hence, while technology can enhance access, it cannot replace the trust forged in personal adviser-client relationships.

A recurring theme across regions is how advice can either be a luxury for the wealthy or scaled for broader segments of the population. For Australia, the challenge is ensuring super funds, banks, and advisers alike innovate to serve not just high-net-worth individuals, but also middle-income earners who arguably benefit the most from structured guidance.

7. Supply Constraints and the Rise of Advice as a “Luxury Good”

One of the more compelling trends Andrew sees is the risk of financial advice becoming a “luxury good.” When the Australian government increased educational requirements and regulation, many advisers left the industry. According to CoreData’s figures, the number of practicing advisers in Australia fell dramatically in the span of a few years—from over 20,000 at its peak to around 15,000, with perhaps only 11,000 of them operating full time.

Stricter regulations and higher educational standards can be positive, as they tend to weed out disreputable practitioners and bolster industry credibility. However, the unintended consequence is that with fewer advisers in the market, costs for compliant advice have soared, effectively pricing out some Australians.

Ethical Considerations:

• If advice is to remain a cornerstone of public financial well-being, the industry must innovate to meet underserved communities. Digital advice tools, streamlined service models, and partial or “scaled” advice may ease the cost burden for households that cannot afford comprehensive ongoing advice.
• Professionals who position themselves in niche markets—servicing, for instance, only high-net-worth retirees or exclusively young professionals—must remain transparent about what they do and do not offer. Specialty is beneficial, but it should not be an excuse to ignore or misguide those outside a practitioner’s scope.

8. The Rising Cost of Advice and Possible Solutions

The cost to produce a single Statement of Advice (SoA) in Australia can be significant. In earlier research, average figures of around AU$5,000 to $6,000 per piece of advice were cited. Recent inflationary pressures and rising operational expenses—from compliance to technology licensing—are pushing these costs higher.

Yet, as Andrew notes, certain organizations have successfully scaled to bring costs down:

1. Technology Adoption: Automated data collection, digital fact-finds, and artificial intelligence-driven modeling can drastically reduce human labor in repetitive tasks. Ethically, however, advisers must ensure these tools are accurate, transparent in methodology, and tested for bias.
2. Offshoring and Outsourcing: Some businesses outsource administrative tasks to lower-cost jurisdictions. While cost-effective, this approach raises ethical questions about data security, oversight, and the potential for miscommunication when staff are unfamiliar with Australian regulations or cultural nuances.
3. Specialization and Simplification: By focusing on a singular, well-defined segment—such as retirement transitions, or high-income professional couples—advice businesses can streamline workflows and deepen expertise. This can allow more efficient delivery and reduce the overall cost to the client.

From an ethics standpoint, advisers must remain vigilant that these cost-saving measures do not degrade the quality of advice or compromise client confidentiality. Any decrease in expense is beneficial only if it does not come at the expense of professional and ethical obligations.

9. Addressing Consumer Confidence in Uncertain Economic Times

Consumer confidence is notoriously fickle, often swayed by interest rate hikes, global economic instability, and inflation. Andrew’s data shows a split in sentiment: wealthy individuals with stable income streams feel relatively optimistic, waiting for rates to drop so they can invest further, while more vulnerable groups—those with job insecurity or high expenses—are growing cautious and reining in spending.

In times of volatility, the ethical adviser serves as a stabilizing force, teaching clients how to manage risk without succumbing to panic. This may mean advising clients to hold off on purchasing or to carefully review monthly cash flow rather than encouraging them to invest at the wrong time. Short-term personal commission gains must never override long-term client outcomes—an ethical principle that underpins all professional conduct.

Trust-building in a downmarket or high-volatility climate can sometimes be as simple as regular communication. Transparency about what’s happening in markets, quick responses to client queries, and frequent check-ins demonstrate the adviser’s commitment to client welfare, reinforcing an ethical stance of ongoing support rather than transactional relationships.

10. Politics, Immigration, and Their Impact on Retirement

A tangential yet relevant topic involves broader socio-political forces. As Andrew suggests, Australia’s birth rate alone may not sustain its aging population. Government policy thus shifts to immigration, welcoming skilled labor to help bolster the tax base. If done effectively, this can support the infrastructure of care needed for older Australians. However, poorly managed immigration can create tension in the housing market and strain resources—factors that also trickle down to financial advice strategies.

Clients sometimes look to their advisers for guidance on whether property markets will be affected by immigration policy or if upcoming elections might lead to tax reforms that favor certain age groups. Here, the adviser’s professionalism and ethical duty are in stating what is known versus what is speculative. Maintaining a balanced view and explaining possible scenarios is key to upholding trust, especially when legislation or policy could dramatically affect a client’s retirement or wealth-building plans.

11. The Next 15 Years: Opportunities and Responsibilities

Andrew observes that the next 15 years could represent the “best time ever for financial advice.” This optimism is fueled by growing demand from aging populations, increasingly complex regulatory frameworks, and heightened public awareness of money management’s importance. Nonetheless, it also comes with cautionary notes regarding capacity constraints and cost inflation.

Professional Responsibilities:

1. Serve the Underserved: A key challenge is ensuring that financial advice does not become the exclusive domain of the affluent. Innovative models, perhaps involving group workshops, robo-advice platforms, or government-subsidized guidance for vulnerable groups, could close the advice gap.
2. Ethical Risk Management: As the industry consolidates, large firms may absorb smaller ones, or specialized practices may become more entrenched. During such transitions—mergers, acquisitions, restructuring—upholding the client’s best interests is paramount. Advisers must avoid conflicts of interest that can emerge when a newly merged entity promotes only in-house offerings.
3. Continuous Evolution: With rapid technology changes, from AI to blockchain-based platforms, advisers will need to continually update their knowledge to ensure they meet ethical standards. Embracing innovation can bring massive efficiency gains, but blindly recommending new instruments without rigorous due diligence is ethically fraught.

12. Shaping a Culture of Professionalism and Ethics

Ultimately, the future of financial advice hinges on a culture that values professionalism and ethical leadership at every level. Formal qualifications and licensing requirements set minimum standards, but true professionalism goes further, driven by interpersonal skills, empathy, and a deep respect for the client’s individual journey.

Cultivating Ethical Awareness:

• Mentorship and Peer Review: New advisers can learn a great deal from seasoned professionals who exemplify ethical behavior. Regular peer reviews or “ethics roundtables” within firms could foster an environment where dilemmas are openly discussed, and best practices shared.
• Client Feedback Loops: Encouraging open, honest feedback, potentially through anonymous surveys or formal review sessions, holds advisers accountable. It also shows that the firm prioritizes ongoing improvement.
• Industry Associations and Regulatory Bodies: Groups like the Financial Planning Association (FPA) or the Financial Services Council (FSC) can play a substantial role by offering clarity on ethical guidelines and up-to-date training on emerging issues.

13. Conclusion: A Shared Responsibility

Navigating the future of financial advice is more than a question of profitability or growth targets. It is a moral and professional endeavor that impacts the retirement security of millions, the broader investment climate, and the integrity of the financial system. Through responsible data usage, better client engagement, and unwavering ethical standards, advisers have the opportunity to sustain the trust that has steadily been rebuilt since the days of intense scrutiny during the Royal Commission.

From superannuation funds working to serve both small and large account holders, to boutique advisory firms refining their niche expertise, the industry’s commitment to trustworthy conduct will be tested in the years ahead. The increasing cost of delivering advice might push some players to innovate in technology or consider specialized service models. At every step, the emphasis must remain on doing right by the client, underscored by transparent communication, adherence to fiduciary duties, and respect for diverse socio-economic realities.

The Path Forward

1. Greater Accessibility: As more Australians, and indeed citizens worldwide, demand financial guidance, technology and policy should be harnessed to make advice services more accessible and affordable without diminishing quality.
2. Robust Professional Culture: By blending rigorous qualifications with ongoing ethical training, the advisory community can ensure clients continue to regain—and retain—trust in financial advice.
3. Adaptation to Demographic Realities: Retirement in the 21st century is no longer one-size-fits-all. Ethical advisers will adapt their strategies to accommodate non-traditional retirement paths, uncertainties in housing security, and emergent socio-political influences.
4. Sustainable Industry Growth: Through selective mergers, strategic specialization, and the cultivation of next-generation advisers, the industry can grow responsibly, ensuring that advice remains a public good, not just a luxury.

Viewed collectively, these imperatives point to a profession in transition. Yet that transition is full of promise. The best advisers will continue to champion their clients’ goals, working in tandem with regulators, peers, and the broader financial services ecosystem. By doing so, the industry can uphold professional excellence, bolster ethical conduct, and ultimately deliver the life-changing guidance that clients so urgently need.

Accreditation Points Allocation:

0.10 Technical Competence

0.10 Client Care and Practice

0.10 Regulatory Compliance and Consumer Protection

0.10 Professionalism and Ethics

0.40 Total CPD Points