In an interview with the Washington Post newspaper, a Yale professor and Nobel Prize-winning economist has called on domestic governments to introduce subsidies for financial advice services to safeguard people against the potential of market failures.
Robert Shiller who was awarded the Nobel Prize for Economics in October said professional financial advice can play an important role in alleviating the structural problems he has identified in his study of global capital markets. Professor Schiller said that, “I have a very idiosyncratic recommendation, people should be encouraged to get professional help with their investing. We should be subsidising financial advisers.”
Shiller has used the United States as an example of a country that has made use of government subsidies in the medical sector, and has suggested that it was time to consider similar arrangements for financial services.
Brad Fox Association of Financial Advisers chief executive has offered an Australian perspective, saying that, “direct government subsidisation is not the ideal policy – but that there are ways governments can help grow the number of people engaging professional advice services. Fox suggested two essential steps are necessary before looking at subsidies – providing tax deductibility both for initial advice and for ongoing advice and boosting financial literacy in schools.
Fox has conceded that until Australia can get those two steps right, subsidises for financial advice services should not be a consideration and said that it would not only “help those Australians who are unable to afford to pay for advice” but also be beneficial for “those who need it most to have access to professional financial advisers.”