If implemented, the Trowbridge Report recommendations could “kill the industry overnight”, rendering many businesses unviable, say two valuation experts.
Echoing Mr Prendeville’s comments, Centurion Market Makers director Chris Wrightson said limiting adviser remuneration, which a lot of older advisers who operate as a single-person practice rely on, will push them to move out of the industry and even sell their businesses.
“If they reduce commissions dramatically you will see an exodus of quite a lot of the older, [single-person operator], risk-only-type advisers because they simply won’t make the living they used to,” Mr Wrightson said.
Introducing the proposed remuneration reforms will also see the value of risk advice practices decrease, he said.
“[The proposed remuneration model] effectively equates to reduced remuneration or more importantly reduced business earnings, and planning businesses are like any business – if you’ve got to forecast for reduced business earnings or reduced profits, the value of your asset falls,” Mr Wrightson said.
"If Westpac puts out an announcement that their forecast earnings for the next 12 months are going to fall, shares fall also.
“Clearly, if implemented, [the] value of risk planning books and risk advice practices will fall,” he said.
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