This is based on an article that was first published in Money Management.

The unintended consequences of new regulation can be costly, making advice even more unaffordable, says Midwinter’s Ivon Gower. 

Signing documents in person has always been a fundamental part of proving identity – at least until the coronavirus pandemic stopped people leaving their homes.  

The lesson is even good regulation can have unintended consequences under different circumstances. 

Fortunately, governments moved quickly. Laws were reformed so that documents could be signed electronically and signatures witnessed remotely1.  

This helped professionals such as financial planners keep serving their clients. However, it remains a small consolation as planners continue to battle unintended regulatory consequences. 

Regulatory balance is hard, unintended consequences are the result 

The intention behind regulation has been good: to raise the standard of advice. It’s not easy and finding solutions to regulatory overload isn’t about blame. Many of these issues are truly unintended, and the financial advice industry is not alone in tackling the problem.  

A recent NSW Productivity Commission Green Paper raised the challenge of keeping regulations appropriate in an era of exponential technological change2. An Audit Office review found few regulatory proposals put to the State Cabinet justified the additional regulatory burden while regulatory impact statements could be a last-minute, ‘tick-the-box’ exercise. 

But the advice-specific list of regulations and unintended consequences is long and growing. 

A common regulatory response to manage issues, such as conflicts of interest, has been to raise consumer disclosure. However, the evidence shows that few people read lengthy documents3. For advisers, it has just pushed up the cost of producing advice. 

Today, new regulations are causing another round of unintended consequences: the cost of advice continues to escalate, and many advisers are now leaving the industry. Adviser Ratings4 estimates about 5000 advisers will depart in the next 1-2 years, which would bring total numbers down to about 16,000. 

New educational requirements have placed pressure on many advisers. At the same time, insurance costs are rising to reflect heightened risk following the Royal Commission and ASIC’s adviser licence fees are set to increase 160% over two years5

As an industry, we know that moving away from product-led advice and towards strategic advice is the way to deliver better outcomes for clients.  

The question is whether we currently have a high-performance regulatory framework that supports quality advice. 

Time for tech  

These unintended consequences continue to make it harder for the mass market to access quality advice, just at a time when they need it most.  

While the Australian economy is recovering from its first recession in decades, many parts of the community continue to struggle. 

Innovation and new technology should be playing a stronger role in bringing advice to more Australians, but many practices are risk averse in the wake of the Royal Commission. It’s understandable when regulatory costs keep rising.  

It was only two years ago that the Productivity Commission suggested digital advice could help address the unmet massive demand for financial advice6. It’s been a long journey, but some super funds are now offering more sophisticated digital advice that tackles a member’s clearly defined financial goals. 

Advisers are also using technology to help clients tackle more challenging financial goals. Tech can do some of the heavy analytical work and then present the results in easy-to-digest form. This leaves an adviser with more time to better understand a client’s competing goals and help them prioritise the right choice for their desired lifestyle. 

Good advice platforms help automate some aspects of advice, such as running clients through future scenarios by quickly showing a range of outcomes based on various choices.  

For example, Midwinter’s MultiGoal tool in our AdviceOS platform allows advisers to run a real-time goal prioritisation session with a client and easily produce a statement of advice. Making this analytical work easy allows an adviser to focus on what clients really want. 

Technology can also help lift some of the regulatory burden from the advice sector. Many advisers are fearful of inadvertently breaching regulations such as the best interests duty.  

The focus often falls on product fees which, on paper, can easily be used to justify product choices. However, fees are just one factor that help generate net returns, which is only one component of helping clients achieve their broader strategic goals. 

The right platform should make it easy to generate, save and search statements of advice and records of advice that clearly outline the rationale for advice. 

The industry may not yet have a high-performance regulatory framework, but technology can automate many of the recurring areas where a practice can inadvertently slip up. For example, Midwinter’s Key Risk Indicator Solution (KRIS) module can reveal issues such as overdue fee disclosure statements and link directly to the right solution.  

The regulatory equilibrium in the advice industry is well intended, but not yet balanced. It’s unlikely to change in the near term, which means technology will have an increasingly important role to play in bringing quality advice to as many Australians as possible.  

Ivon Gower is Head of Product at Midwinter Financial Services. For more information about Midwinter’s AdviceOS visit or contact Ivon and the team at [email protected].

[1] ParlInfo – BILLS : Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 : Second Reading. (2021, March 25). Retrieved from
[2] Green Paper | Commissioner for Productivity. (2021, March 19). Retrieved from
[3] REP 632 Disclosure: Why it shouldn’t be the default | ASIC – Australian Securities and Investments Commission. (2021, March 25). Retrieved from

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