Simplified advice: what life insurers (and others) need to know

 In short

• The simple advice regime’s purpose is to make it easier and more affordable for more Australians to access financial advice. 
• In creating a new level of adviser, there is a risk of adding greater complexity.
• Australia is still some way from deciding on all the new model’s details, but discussions have begun.

In life insurance and other areas of insurance and financial advice, one of the most closely watched and potentially transformative developments is the introduction of the simple advice regime.

Following the recommendations of the Quality of Advice Review, a new class of adviser has been proposed in Australia — one who is empowered to provide scoped personal advice.

Their services will be less personalised and customised than those provided by full-service advisers and will be restricted to simpler financial products.

The proposal is in response to the fact that the cost of personal financial advice and the complexity of the regulatory environment have created a situation in which many Australians are unable to source and/or afford financial advice.

Based on 2020 member research from the Financial Planning Association of Australia – now part of the Financial Advice Association Australia – it costs an average of A$3,300 to set up a financial plan and A$4,300 per annum for ongoing advice.

According to Investment Trends’ 2024 Australian Financial Advice Report, 10.2 million Australians planned to seek a financial adviser, with more than half preferring one-off, issue-specific advice.

“The reforms from the Quality of Advice Review are coming through in waves,” says Matt Ellis, partner at Sparke Helmore Lawyers.

In May 2025, Ellis wrote a summary piece for ANZIIF members on the simple advice regime and participated in a webinar.

“There are a number of tranches, and only tranche one and part of tranche two had come through before that article,” he says.

“The really interesting part of it – the focus of this article – has yet to come through as draft legislation or consultation.

From what we can gather, we know it is coming, but colour and detail are not here yet.”

The tranch 2B consultation paper was anticipated in the second half of 2025, but to date, is still not forthcoming.

So, what will it all mean?

What is a ‘qualified adviser’?

A qualified adviser would have fewer credentialling requirements. As they’re only permitted to offer limited-scope advice, they would not be burdened as heavily with the compliance and reporting responsibilities that fully licensed financial advisers must meet.

This, in turn, would reduce the cost of their advice, as well as the resources required to offer that advice, including time.

“The intent behind this is a recognition that not everybody is receiving the financial advice they need, because it’s expensive,” says Ellis.

“Some people don’t want to spend that money on a financial adviser for what, in theory, should be a relatively simple transaction.”

Whether or not the new level of adviser really does simplify things, he says, is another question altogether.

“Every time these types of changes are made, they add complexity to the regulatory framework, which is already very complex,” he says.

Does simplification increase risk?

If financial advice is delivered by less qualified advisers, questions naturally arise around liability and the management of consumer expectations.

“There’s compromise made with any regulatory reform, and there is no difference here,” says Ellis.

“The more we open up channels to enable people to get simple advice more cost-effectively, the lower the quality and breadth of the advice they receive.

"It means it’s going to be delivered by people who are less qualified and who are more constrained in what they can advise on.”

Of course, there is a powerful argument around the damaging effect of no advice, as opposed to simplified advice.

“The advice accessibility crisis in this country is leaving far too many people under-insured and unprotected when it comes to their future financial security,” says Council of Australian Life Insurers CEO Christine Cupitt.

“Getting the right advice can set them up for the future. Getting no advice can leave them with nothing to fall back on when times get tough.”

Risk can increase if financial advice does not result in expected outcomes, Ellis says. If expectations are not met, reputational and legal issues could follow for insurers.

Ellis also suggests great care and effort will need to be taken around the task of redefining regulatory duties.

“They’re talking about a simplified best interests duty, but what does that really mean?” he asks.

“It has been proposed that the best interests duty be modified to be outcomes-focused and less prescriptive, but it is not yet clear how such a modified duty will work and, most importantly, how it can be operationalised by insurers.”

Despite the ‘simple’ label, Ellis believes operational complexity is also likely to increase, at least in the short term.

“With any change to the regulatory requirements, you need a framework to ensure compliance,” he says.

“You’re going to need to establish a framework that ensures you’ve got the qualified advisers who meet the relevant requirements and act within the restraints of the new regime.”

Such a framework includes training, monitoring and oversight, reporting and risk management. That likely means new or additional internal systems and processes in organisations that are involved.

Leading the way

If Australia successfully adopts a simple advice regime, it will be interesting to see how the move influences other countries across APAC, most of which still have a single-tier model and also struggle with the affordability of financial advice.

For example, Singapore takes a more prescriptive route to providing and regulating financial advice, under the Financial Advisers Act 2001.

The Monetary Authority of Singapore licenses all financial advisers and imposes specific requirements around products offered.

There are strict obligations relating to how a consumer must be informed before, during and after the advice process. There is currently no simplified tier.

Likewise, New Zealand legislation does not distinguish between different levels of advice, says Financial Markets Authority (FMA) executive director, Regulatory Delivery, Clare Bolingford.

“The financial advice regulatory framework in New Zealand requires those who give regulated financial advice to fulfil a number of duties, one of which is ensuring clients understand the nature and scope of the advice,” she says.

Advisers must be clear about what sort of advice they will give and what will not be covered. Importantly, says Bolingford, each adviser must take “reasonable steps” to ensure each client understands any limits before any advice is offered.

The FMA recently launched a review of financial advice accessibility, to help develop an understanding around opportunities and challenges in relation to improving accessibility.

This may also include advice-at-scale being achieved through a digital delivery mechanism, if a fitting solution was to be developed, Bolingford says.

A work in progress

Right now, as mentioned, there is no firm timeline for the rollout of Australia’s simple advice regime.

How the required balance is struck between simplicity and oversight, accessibility and consumer protection, will likely take time and effort to figure out. The intent is clear and positive. The execution, however, is far from simple.

Writer’s insight

“Some of the very best ideas are the most difficult to execute, as is the case with the simple advice coming sometime soon (or not) to the world of Australian financial advice. It increasingly seems as if this concept of simplification, without tearing down the system and starting over again, can only result in greater complexity. Simple advice has an excellent purpose but a high level of difficulty. Let’s hope the consultation papers spark some innovative ideas around execution.”