Financial planners would be wise to start preparing for a post-FoFA regime, and advisers are going to have to be a lot more disciplined in terms of how they segment their client base and develop/communicate client value propositions. There will be an increased focus on value, and it will be critical to have strong service models for high net worth clients to readily opt-in. This will be especially important as FoFA could result in the loss of clients with lower contribution levels who could put up more resistance to different fee models.
The one thing that may offset this is the extension of scalable advice. If this was introduced, it would allow individual advisers to shape a simpler practice and offering for clients that have simpler needs, and charge a corresponding fee. It is true that FoFA will create more work and potential headaches for financial planners, but it presents an opportunity for firms that are willing to get on the front foot and think about improved business models, client value propositions and the client engagement process ahead of FoFA. Now is not the time to put this in the too-hard basket.
If you’re struggling with how FoFA might impact your financial planning business, No More Practice 2 is an invaluable resource. Professional Investment Service’s Robbie Bennetts has written an insightful whitepaper in which he looks at the impact that the fees versus overrides and commissions industry debate will have on the value of a business.
