A majority of respondents to an ifa straw poll have anticipated the banks will make significant cuts to their retail financial planning offerings post-FOFA, as experienced in the UK.
Of the 188 respondents to the straw poll, 106 (56.4 per cent) responded ‘yes’ to the question “Will the banks slash their advice offerings post-FOFA as they have in the UK?”, while 82 (43.6 per cent) responded ‘no’.
The UK financial advice market has seen significant changes in its composition since the introduction of the FOFA-like Retail Distribution Review reforms in January, with more than 5,000 salaried bank financial planner jobs cut and household names such as HSBC, Santander and Lloyd’s TSB slashing their advice units.
Overwhelmingly, the decision of UK banks to exit the advice market has been attributed to the new regulatory environment.
The poll results indicate there is fear among Australian financial advisers that similar action may be taken by the Australian banks in response to similar regulatory pressure.
The findings of last week’s Financial Services Council-DST survey of wealth management chief executives – which included that “the cost and volume of regulation is the number one concern of the CEOs of Australia’s leading financial services companies” – are unlikely to assuage those fears.
However, the Australian banks have not given any firm reason to indicate they will respond to the regulation in this way.
Speaking to ifa, Mike Chesworth, general manager of bank financial planning at BT Advice, said Westpac is not going anywhere when it comes to retail advice.
“Westpac and St George Financial Planning are growing both in terms of planner numbers and the number of clients their planners advise,” Mr Chesworth said.
“In Australia, bank-channelled advice provides a vital link between the traditional services banks provide and wealth management. They are fundamental to the intent of FOFA to broaden out the advice offering to more Australians.”
Earlier this year, NAB chief executive Cameron Clyne said the closure of the retail advice units of the NAB-owned UK-based Yorkshire and Clydesdale banks was not reflective of the bank’s “strategy for [its] wealth franchise in Australia”.
Indeed, Vanguard Investments’ Robin Bowerman says the banks have an altogether different strategy.
“The banks [in Australia] have taken a very different strategic path [to banks in the UK],” Mr Bowerman told ifa in June.
“Instead of abandoning advice, they have bought up the major platforms and distribution channels and consolidated them.”
Consumers receiving financial advice have reported less detriment to their menta...
Superannuation funds have been tipped to fill the space in the advice sector lef...
Adviser dealer groups are hampering the ability of financial planning technology...