The Future of Financial Advice (FoFA) reforms will have a significant impact upon the financial planning industry. As discussed in previous blogs, one of the areas that will be most affected is revenue models, with a ban on commissions leading to other fee-for-service models such as hourly-based fees.
Different clients have different needs, so it makes sense to develop scalable advice models with corresponding fee structures. A recent industry survey also found that the CEOs of wealth management firms believed strongly that whoever successfully achieves a scalable advice model would have a distinct competitive advantage.
The survey, conducted by PricewaterhouseCoopers and the Financial Services Council, also found that greater exploitation of low-cost direct and digital distribution channels will play a key role in the future provision of financial advice. Many industries around the world have been adopting these kinds of business models for years. They are key to sustaining improving profit and overall competitive advantage. For some financial planning firms, scalable advice under FoFA could mean the difference between annihilation and healthy business success.
