The financial advice industry is reminiscent of one in its death throes. Ray Miles explains how the consumer revolution that has led to change in many other sectors will change financial planning forever – whether the industry likes it or not.
Practices can employ a range of initiatives and programs to build practice value. Troy Beutel says that practices can improve their EBIT and bottom-line profit overnight by working with ‘‘business-minded’’ licensees that charge fixed fees for their services.
Many advisers are actively moving towards a fee-for-advice model. With this shift, however, Craig Donaldson says quantifying and communicating your value proposition is critical in getting clients to pay for advice.
FoFA presents financial planning firms with a number of challenges. However, as Mark Ballantyne explains, good client engagement will not only make FoFA easier but also improve the value and saleability of your practice.
The level of readiness for FoFA among advisers varies. Opt-in will have a potentially significant impact on advice firms, and fee-for-service will be a matter of survival and not just profitability.
The financial advice industry seriously needs to rethink its approach to charging for advice. Financial planners should look at success-based fees in considering what model they might adopt in a fee-for-service post-FoFA world.
There is scope for significant improvement in the provision of good quality retirement advice in Australia. However, removing conflicts of interest in the financial advice industry is easier said than done.
The financial planning profession faces a number of challenges as a result of FoFA. However, the reforms present financial planners with a number of opportunities to run more efficient, collaborative practices with a strong focus on value.
The top issues facing Australia’s financial planning industry right are FoFA, revenue and competition. Financial planners need to get the balance right in addressing each in order to make sure their business model is viable and sustainable.
Almost a third of financial advisers have managed to grow their profit levels back to a point that matched pre-GFC levels, and financial advisers who have reengineered their businesses to turn a profit have embraced a fee-for-service model. However, it would seem that the financial planning industry as a whole has a long way to go in embracing this model – not just for the purposes of compliance with FOFA – but for the sake of the bottom line.
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