As February draws to a close, financial advisers face increasing regulatory pressures alongside opportunities for innovation and growth. This week has been dominated by concerning projections about the Compensation Scheme of Last Resort (CSLR) levies, technology advancements to enhance advice efficiency, and a continued focus on education standards.
Regulatory Pressures & Industry Response
The financial advice profession has received concerning news about CSLR costs. The Financial Advice Association Australia (FAAA) projects that future levies could reach $125 million—a dramatic increase from initial estimates. Even more alarmingly, other reports suggest the figure could go as high as $193 million, placing enormous financial strain on advice practices. In response, the FAAA has called for explanations regarding the Australian Financial Complaints Authority's (AFCA) claims handling cost forecasts.
AFCA has defended its position, stating they are "recovering costs and no more" while predicting a "much lower claims handling increase" than initially feared. This contradiction in messaging has created confusion across the sector, with the SMSF Association noting that SMSF structures are not to blame for the rising CSLR complaints.
ASIC has released its 2025 priorities on the regulatory front, providing advisers with a roadmap of the regulator's focus areas for the year ahead.
Practice Management & Growth
While regulatory pressures mount, platform providers are showing strong growth and innovation. HUB24 and Netwealth have reported positive results, with HUB24 maintaining its top platform position for the third consecutive year and Netwealth reporting strong growth in new advisers. These platforms are outperforming institutional competitors in innovation, positioning themselves as technology leaders in the advice space.
Centrepoint Alliance appears bullish on advice amid a $19 million half-year revenue growth, while AZ NGA is positioning for further growth with a key appointment of a new Group CFO.
After a promising start to 2025, adviser numbers have stabilised, though Sequoia topped adviser losses for the week as a new AFSL opened.
Client Engagement & Retention
Client concerns about the cost of living continue to dominate advice conversations. Colonial First State research shows that the cost of living remains the top concern for Australians trying to retire comfortably, with many reporting reduced retirement confidence.
An interesting development in high-net-worth client services shows increasing demand for advice on aligning investments with philanthropy. This suggests that advisers may need to develop expertise to serve wealthy clients effectively.
Meanwhile, Professional Planner has highlighted "seven deadly sins" holding back best practice in advice, offering practitioners valuable insights on improving service delivery.
Technology & Innovation
Technology continues to reshape advice delivery. UniSuper is launching a digital advice platform in partnership with Ignition Advice, targeting the "missing middle" of advice seekers. This launch is part of their strategy to offer a full spectrum of advice services.
Investment platforms are also embracing innovation, with several experimenting with AI functionality to secure adviser favour. However, licensees are being warned about AI risk governance, and the industry is debating where to draw the line for AI in advice.
Corporate leaders across industries now view AI as the most critical technology for business profitability and innovation. However, to maximise its potential, advisers need to shift their mindsets.
In software news, Iress has reported a profit rebound after completing its transformation program, describing itself as a "simpler, leaner organisation". Meanwhile, Insignia Financial is revisiting advice tech as its efficiency drive continues.
Notable Industry Movements
On the professional standards front, a former Melbourne financial planner's appeal has been dismissed, reinforcing the industry's commitment to maintaining high ethical standards.
The FAAA has announced the winner of the Gwen Fletcher Memorial Award for the summer semester while also seeking advice ambassadors to explain the profession to politicians ahead of the upcoming election.
In the talent market, Viola Private Wealth has welcomed its inaugural Chief Investment Officer, strengthening its investment leadership team.
Looking Ahead
As we move into March, advisers should prepare for:
- Continued debate around CSLR funding and its impact on practice viability
- Further integration of AI and digital advice solutions
- Election-focused advocacy as associations ramp up their political engagement
- Increased focus on efficiency amid operational cost pressures
Key Takeaways for Advisers
- Review your practice's financial projections to account for potential CSLR levy increases
- Evaluate how digital advice offerings from institutions might complement your service model
- Consider how AI can be appropriately integrated into your workflow while managing risks
- Develop strategies to address clients' cost of living concerns as they impact retirement planning
- Engage with industry advocacy efforts as the election approaches
