According to CFS, an unarguable trend is taking shape in advice with the number of advised customer balances under $150,000 halving in the past five years — from some 40 per cent in 2019 to less than 20 per cent today — while at the same time, the number of advised customer balances over $500,000 has more than tripled.

This trend has been further exasperated by a 40 per cent increase in fees associated with a statement advice to over $3,500 for the typical client over the same period.

“The scale of this challenge means it will not be solved by fine-tuning the existing regime. Without meaningful reform, increasingly only wealthy Australians will be able to access personal advice,” CFS said.

In addition to the rapidly increasing cost of providing advice, CFS explained that the current legislative framework has also contributed to the provision of financial advice that is no longer fit for purpose to scale different customer needs.

“For example, the breadth of information requirements and scope of research associated with developing and providing a Statement of Advice can sometimes provide clients more comprehensive advice than they need or want,” it said.

“Short-form, interim approaches such as the use of the Record of Advice have not been widely utilised as they were limited to narrow use cases and took a layered and prescriptive approach to determining whether they could be used,” it continued.

“Whilst well intentioned, the practical effect did little to address the costs and risks of providing financial advice. We have seen few examples of improved access to financial advice as a result of it”.

Moreover, CFS noted the challenges associated with a high discrepancy between the number of advisers leaving the industry versus those replacing them, which it said could be as high as around 6:1.

Should this continued, it noted, “the already significant challenges associated with accessing affordable financial advice are likely to be exacerbated”.

“These trends are disproportionately impacting on, and reducing access for, those with lower account balances and/or those who are seeking relatively simple and often single-topic financial advice.  This often includes those with lower incomes and women who are less likely to have the financial means to afford financial advice under the current regulatory regime”.

As such, CFS is hopeful that the proposals put forward in the QAR are a “step in the right direction and deserve careful consideration”.

“This review provides a timely opportunity to rebalance the regulatory regime such that all Australians have the opportunity to access financial advice to improve their financial wellbeing”.