FOFA leaves its mark on financial services
2012 will stand as a watershed year for the Australian financial planning industry – the year during which the various elements of the Future of Financial Advice (FOFA) legislation passed the Parliament and began the process of being translated into regulation.
As the year has drawn to a close, we have been witness to the industry accepting the reality of the FOFA changes, and in most instances, seeking to make the best of something which many people continue to view as a less than perfect outcome.
2013 is, of course, an election year, and if there is a change of Government and the Coalition lives up to its promises, then the changes being wrought via FOFA may not seem that bad at all and, indeed, as ultimately benefiting the industry.
As the industry enters the New Year it needs to accept that, for better or for worse, financial planning needed to move beyond a number of the practices and commercial models which had distinguished it over the prior two decades, not least conflicted remuneration.
However, the Government’s approach to achieving its policy objectives with respect to both FOFA and its Stronger Super changes has been far from perfect, giving rise to a number of anomalies, and in some instances tilting the playing field in favour of the industry superannuation funds.
It is these anomalies and imbalances which will need to be addressed if the financial services industry is to achieve the objectives which originally gave rise to the development of the FOFA legislation.
2012 also proved to be a pivotal year for the Financial Planning Association (FPA) and its ambition to become a fully-fledged professional body.
While provoking the ire of other industry participants over the manner in which it dealt with FOFA negotiations, the FPA claimed this year that it had succeeded in moving back into the black.
Overcoming the considerable revenue black hole created by changing its membership structure represented a signal achievement by the FPA, which clearly continues to benefit from being the vehicle via which planners can access the Certified Financial Planner (CFP) designation.
The FPA also ends the year on a high note with the Minister for Financial Services, Bill Shorten, delivering on his promise to introduce legislation which will enshrine the term ‘financial planner/adviser’ in law.
However, the Association of Financial Advisers also recorded a strong year, leading the way on discussion around life/risk churn, securing the presence of the Shadow Assistant Treasurer, Senator Mathias Cormann, at its roadshow events and drawing record numbers of attendees to its national conference on the Gold Coast.
Both organisations already know they have a full workload in the opening months of 2013.
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