Plagued by paperwork
Financial planners are being prevented from finding new clients and improving the quality of advice they provide because of an overwhelming compliance burden under Financial Services Reform (FSR), a new survey has revealed.
The survey of more than 500 advisers found that compliance management is taking precedence over other aspects of advisers’ work — including improving the quality of service provided and sourcing new business — for almost 70 per cent of planners.
It found advisers endorsed the intent of FSR for client protection and disclosure, but were frustrated at the impracticalities of the large statements of advice required, which were preventing them from doing the best for their clients.
Market researcher Vanessa McMahon, who conducted the survey on behalf of Assirt, says the FSR regime had become a massive burden on advisers.
“There is a clear and unanimous view that the new FSR compliance regime is the biggest day-to-day headache they are obliged to deal with,” she says.
McMahon says both clients and advisers are frustrated with the paperwork, particularly for low-value transactions. A widespread concern amongst them is that excessive compliance demands will mean that providing smaller clients with financial advice will no longer be a viable proposition, she says.
Asked to comment on the impact of the tougher compliance regime as part of the survey, one adviser commented that “you can say what you have to say in two pages for someone with $5,000”.
Other comments made by advisers include, “no one will look after the mums and dads” and “financial planning is now only for the privileged few”.
Apart from managing compliance, the next biggest issue facing financial advisers is the pressure to find new clients, with 44 per cent of those surveyed nominating this as a major concern.
But advisers say sourcing new business is even harder with increased compliance demands.
“It’s a classic example of using a sledgehammer to crack an acorn,” one adviser commented.
The other major concerns nominated by advisers in the survey are managing clients’ expectations and improving quality of advice provided, with 38 per cent of advisers saying both issues have a significant impact on the conduct of their business.
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