Financial planning is set to have a revamp, the Financial Planning Association of Australia has said, expecting the industry to see a change in fee models and business operations, a shift away from product distribution and specialisations in different clientele.
Dante De Gori, chief executive of the FPA, presented the body’s outlook in an address to a Melbourne event hosted by financial services communication specialists Pritchitt Partners.
The FPA’s forecast for financial planning is positive, but it does expect the profession to present a different face in the future.
Compliance needs and cost, education standards and reform, changes in the market such as banks leaving advice, and business evaluations are all ongoing challenges facing the sector, the FPA boss noted.
Transparency and labelling will become key, Mr De Gori said, with clients to know when they are receiving advice or being sold a product.
“Product providers and other gatekeepers in the value chain will be held accountable for their role in any failures that cause consumer detriment – proportional liability,” he said.
“Further, the nomenclature of ‘distribution’ will be dead, buried and cremated in financial planning – no more distribution departments and no more reference to financial planners as being a distributor of products. Financial planners will be seen as service providers to customers and policy holders of a product provider.
“There will be true specialisations, with financial planners being recognised as specialist in a number of both traditional areas like SMSF advice, aged care but also new and emerging areas.”
He anticipates fee models will become a mixture of fixed pricing and hourly rates, with the majority of fees paid directly from the client and or administration platforms.
“There will be no more ongoing fee arrangements as we know them today but there will be an invoice for services actually delivered rather than for services that are promised to be delivered,” Mr De Gori said.
“Single, self-licensed businesses will not be common and many will form co-ops with other self-licensed individuals for shared services, admin, reception, paraplanning, premises etc – very similar to the medical profession.
“There will also be the big advice businesses with wealth management – but equally there will be large professional financial planning firms that will offer a variety of professional services to their clients with no product selling.”
He added that there needs to be a better definition covering financial planners, advisers, intra-fund advisers, life insurance advisers and other financial services professionals providing advice.
Other challenges for the space, Mr De Gori said, include affordability and access of service, technology solutions in the planning process, the role of the licensee, consumer awareness, regulation, professional indemnity insurance and a single disciplinary system for the profession.
“Those who take the challenge and opportunities that are there will thrive and so too will the profession,” Mr De Gori said.
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