PJC fails to alarm planners

Financial planners have not been spooked by the reportage and speculation flowing from the Parliamentary Joint Committee on Corporations and Financial Services (PJC), but many are acknowledging that it has impacted the valuations of financial planning practices.

That is the bottom line of recent data collected by Wealth Insights, with most advisers believing that while some changes are inevitable, they will not be implemented quickly, allowing them time to adapt.

The attitude of the planners stands in stark contrast to their industry organisations, which have devoted extensive resources to putting their policy positions before the various government inquiries.

Wealth Insights managing director Vanessa McMahon told Money Management that while planners were broadly aware of the issues being discussed by the PJC and some of the other Government inquiries, they were adopting a wait and see approach.

“Very few [planners] have suggested that the parliamentary committee discussions have prompted them to start changing the way they do business,” McMahon said.

However, she said there was broad recognition that commissions-based remuneration was likely to be impacted by legislative change and, as a result, the value of planning practices heavily reliant on commissions had been undermined.

“They are factoring in the demise of commissions and the multiples they generate,” McMahon said.

On the basis of comments received from planners, she said the practices likely to be worst hit were those with a higher proportion of clients with smaller account balances.

McMahon said on the broader question of what might flow from the Parliamentary inquiry, most believed that while there would be some changes, they would not be too dramatic and there would be plenty of time to make the appropriate preparations.

She likened the attitude being adopted by planners to their reaction to comments by the former Federal Treasurer, Peter Costello, when he suggested that changes simplifying superannuation would mean consumers no longer needed to consult a planner.

“They believed he was wrong then and they believe many of the current suggestions are wrong as well,” she said.

“The bottom line is that many planners regard themselves and the industry as adaptable and very few are actively doing anything in preparation for what is coming,” McMahon said.