The financial planning industry is always going through change, but undoubtedly the Future of Financial Advice (FoFA) is going to bring significant change to the industry. It will result in a change of models for many financial planning businesses, and it might cause some of the older financial planners to get out of the business. Some of them grew up as life insurance advisors who have never charged fees and will find it very hard now to do so.
With the move to fee-based models and all the compliance red tape that that industry has become mired in, many advisers believe financial planning has become very difficult from a business point of view.
As a result, parts of the industry will fragment. You will find that more and more planners are going to gravitate towards certain client segments and provide “limited scope” advice – some call this “scaled” advice. Some planners will work primarily with young people in the mortgage area, and others will specialise in insurance, for example. Both of these areas are still commission based and will become more valuable than fee based businesses. FoFA is turning back the clock where you could look after a client without a 90 page plan!
Financial planning is going to increasingly be an industry for younger professionals, because they will grow up with the new rules and regulations. There won’t be any change for them because it will be all they know.
