The 2019 Licensee Satisfaction Report by Investment Trends found around 43 per cent, up from 33 per cent of financial planners in 2018, said they face hurdles in the way of providing affordable advice, while 39 per cent, up from 27 per cent the year prior, found difficulties in reducing the cost.
The study noted that 11 per cent of planners intended to leave the industry if the full recommendations of the royal commission are implemented, while 7 per cent planned to stop giving advice when FASEA’s requirements come into effect in 2024.
When asked how the royal commission would affect their practice, more than two-thirds of planners (69 per cent) said they intended to use technology to better serve their clients.
Recep Peker, research director at Investment Trends, said planners believe with more efficient use of technology, they can enrich client engagement and better demonstrate value to existing clients, as well as attract new clients.
“While heightened regulation will add time and cost pressures to their business, the vast majority of financial planners have no plans for leaving,” Mr Peker said.
“However, planners recognise the need to evolve their business not only to satisfy regulatory standards, but also to meet the demands of shifting consumer preferences and an uncertain investing climate.”
Self-licensing versus dealer groups
More planners are operating their own AFSL or belong to a self-licensed boutique at 24 per cent, up from 15 per cent five years ago. In the next year, the study found a further 10 per cent intended to take the same route.
However, more than half (55 per cent) said they intended to remain with their existing dealer group. A further 10 per cent are intended to switch to another dealer group within the next 12 months.
“More planners are moving away from the traditional licensee model, believing they can deliver better outcomes for the end-client by taking full control of their operating environment, value proposition and product set,” Mr Peker said.
“Dealer groups remain the backbone of the financial planning industry, and many planners believe that the support, guidance and services provided by their dealer group outweigh the self-licensed model.
“Still, dealer groups can do more to support their network of financial planners. Among those who are part of a dealer group, nine in 10 (91 per cent) seek further assistance from their dealer group – from support with lifting back office efficiency to ongoing client engagement.”
The majority of self-licensed planners (85 per cent) relied on external support to operate their advice business, particularly for compliance/audits, professional development and research.
Mr Peker added: “Ongoing client engagement should be a top priority for planners, as our research shows that those who currently invest more to develop their digital client engagement capabilities are also the industry’s most successful (by revenue, profitability and client growth).
“These successful planners are reaping immediate and tangible benefits of placing their clients at the centre of their business, highlighting the need for greater collaboration between planners and their dealer group to deliver better outcomes for the end-client.”
not accurate – wait for the exam to bite…planners aged over 60 will be in dire straits – if you are not very IT savvy or an accomplished typist then you’re going to struggle getting through the exam – let alone the study. Avalanche is coming and its far worse than these numbers…the math is clear