The top issues facing Australia’s financial planning industry right now are FoFA and revenue. These issues go hand-in-hand for financial planners. It is important to get your business model right in preparing for FoFA and to make sure you have revenue coming in and that your business is going to survive. However, the process of this transition is critical. If you go broke in trying to adapt to FoFA then you’re not going to be very beneficial to your clients.
Another related issue facing financial planners is increased competition. There are direct competitors, as well as competition from industry funds and the banks.
Competition for both business and talented staff is very strong. We are seeing certain companies offering strong incentives for people to move, however, I think this sets a very dangerous precedent. I don’t see that changing, and I think it is confronting everyone in the industry. How do you deal with a competitor approaching one of your good planners, who has been offered an extra $100,000 more, to work for a big company? So there are a number of challenges facing the financial planning industry.
Planners have to sit down and look at where the industry is going, talk to other people and have a think about how they can structure their business in order to tap into other areas of revenue. Whether this is in charging fees to clients, or looking at additional services such as real estate or technology, I would advise planners to look into other areas that can help you grow both your revenue and client base at the same time. If you employ advisers, look at ways to encourage them to stay and not be tempted to go elsewhere.
FoFA is around the corner, so you have to make sure everything is set up for compliance. But you also need to spend some time working out your business model to make sure that the revenue is going to be taken care as well.
