“In the last quarter, there has been a substantial increase in the narrative, coming from all corners of the industry, to reduce compliance red tape to lower the cost of advice and simplify requirements for providing limited advice,” Adviser Ratings said.

“Senator Jane Hume, ASIC, FSC/Rice Warner, the major advice and accounting associations, and other private groups have all contributed to a generally constructive discussion with a variety of models and solutions presented.”

However, there is unlikely to be material change until “blockers” to advice simplification — including current requirements under the best interests duty and the FASEA code — are addressed. Royal commission recommendations, including the single disciplinary body and compensation scheme of last resort, have also stalled. The unwinding of government stimulus also looms as a key headwind for the sector.

“Economic commentators are concerned this may precipitate the collapse of many more businesses, predominantly in the SME sector, which includes most financial advice businesses. It remains to be seen whether the positive impact of increasing consumer demand for advice can offset the financial pressures that many advisers are experiencing,” Adviser Ratings said.

The research house also noted that the number of “zombie licences” — AFSLs that have been scrubbed of advisers and removed from the financial advice register while remaining in-site on the AFS register — has increased significantly, presenting a “prima facie” opportunity to acquire established licences.

“The key motivation for taking this pathway is to shortcut the timeline of six to eight months (and possibly longer) that it takes to get a licence from ASIC in the traditional way. However, buying the licence means buying the processes and systems that have been put in place and previously considered by ASIC to ensure the licensee acts in accordance with Corps Act,” Adviser Ratings said.

“It also means buying exposure to any historical non-compliance that can be fatal for purchasers, so a thorough due diligence is essential.”