Confidence waning as FOFA looms
The Government's Future of Financial Advice (FOFA) proposals combined with the long delays in delivering the actual legislation have served to drive down confidence among Australian financial advisers, with some so concerned, they are thinking of exiting the industry altogether.
That is the bottom line of new research conducted by Wealth Insights, which has revealed a dramatic slide in planner attitudes to the FOFA changes over the past 12 months to a stage where 65 per cent of advisers now expect their businesses to be either worse off or significantly worse off under the new regime. Of that group, 4 per cent have indicated they would likely be closing or selling their businesses.
Confirming similar, but less formal, research undertaken by Money Management more than a month ago, the Wealth Insights data has also revealed that only one in five planners think there will be no negative revenue implications for their business flowing from the FOFA changes.
Commenting on the research findings, Wealth Insights managing director, Vanessa McMahon, said planners were not only deeply concerned about the implications of the FOFA changes for their businesses, but had indicated a deep antipathy towards the Government and the man tasked with implementing the changes, the Assistant Treasurer and Minister for Financial Services, Bill Shorten.
"A year ago, some planners were being dismissive of the changes actually being implemented, but now they are seeing it as a reality," she said.
"The devil was always going to be in the detail, and the detail is now coming out - and planners do not like what they see," she said.
Referring to the 65 per cent of advisers who believed they would be worse off or significantly worse off as a result of the FOFA changes, McMahon said this compared to just 33 per cent of planners who were asked the same question at the same time last year.
"The difference is that a year ago they thought it was a hypothetical, but today it is becoming a reality with dealer groups urging them to make sure they're ready," she said.
McMahon said that irrespective of the Minister indicating that the Government might alter its approach to banning commission on individually advised risk products within superannuation, planners had indicated they remained bitterly opposed to the two year 'opt-in'.
"They see their businesses as assets they have built up for potential sale," she said. "They therefore see FOFA, the two-year opt-in, and the changes to volume rebates as affecting the underlying value of their businesses," she said.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
