The survey – conducted by planning software provider Midwinter – of predominantly boutique and mid-tier group advisers, found 18 per cent of respondents expected a positive impact on their quality of advice, while 30 per cent said it would have a negative effect and 51 per cent expected no change.
Midwinter managing director Julian Plummer said it was “shocking” that 80 per cent of the 330 respondents did not think FOFA would be good for quality of advice.
Further, they did not anticipate and benefit the adviser public image, with just 30 per cent predicting a positive impact on the reputation of planners, 43 per cent saying it would have no impact and 27 per cent expecting a negative effect.
Plummer also said he was amazed that more than half of respondents, or 185 advisers, said they were considering leaving the financial planning industry as a direct result of FOFA.
Many of the comments described FOFA as a “waste of time” and said it was designed to favour, or was even being driven by, the industry super fund sector. Many also expressed hostility to the current Labor government and looked forward to the next election.
“More compliance, yet I do not see how it will get rid of the shonks or improve the behaviour of the product floggers in the industry,” said one.
Others said: “Large impost on planners no real gain for the client”, “more costs for non-aligned practices to bear, making it more likely these practices will have to leave”, “it will not help the client one bit”, “the rich will get richer and the poor will get poorer, the cost of doing business has doubled”, “corporate super has been decimated through all of this”, and “bunch of bureaucratic crap”.
There were a handful of supporters though: “Creates huge opportunity for right strategic business model to improve client outcomes, particularly cost / fee reductions”, said one.
“The industry has suffered as a result of advice centred on the best interests of the adviser rather than the client. FOFA will greatly improve the professionalism of the industry,” said another.
I believe that the mortgage broker business is or was in the process of review, though I am unaware of any material facts. Anyone know?
Once upon a time, Realtors used their commission to pay the advertising etc costs involved in the sale of the property. It is my experience that advertising fees are now in addition to their commission.
Realtors also give their clients financial and taxation advice, and none have the qualifications appropriate to these advice functions.
If we are consistent, then a review should be instituted immediately to ensure that real estate clients receive qualified independent advice. These investors should receive the same level of protection that FOFA is imposing on FP’s.
40 Dave H….well said, I agree whole heartedly.
After reading the comments on this subject I am beginning to understand some of the issues. My business will be slightly affected but can be fixed with a trim of the sails. However I can empathise with the frustration felt within our industry. It’s FOFA at the moment and it will be another anacronym in the future. I don’t buy the conspiracy theory but I do believe its being made on the fly, but its policy none the less. What I would like to see is a even approach to all methods of remuneration on the acquisition or disposal of assets. My wife recently bought a block of land. The realtor was paid 3%, the mortgage broker was paid 0.8% and the govt was paid 2.7% for stamp duty. I don’t begrudge people how they charge but what I don’t like is having one set of rules for one industry and turning a blind eye to another.
There has been some lively debate on this site lately which CAN BE healthy IF we use it to point out specific challenges in our industry and individual businesses and share ideas to overcome these as progressive professionals with a view to continuously improve the perception of Financial Planners, how we can help clients and how we can run more efficient and profitable businesses. However, broad sweeping statements with little detail are not constructive, nor is resorting to childish ridicule of one another simply because of differing opinions. We have seen consumers join the posts on this site and we are doing ourselves no favours when we lower the level of our interactions on here. Let’s keep it productive shall we…
Gerry,
I’m simply responding to
– your emotional tirades against FOFA,
– the “hidden agenda” that you keep referring to, but refuse to identify, and
– the name-calling “girls etc” and accusation that you have made.
If as you say, it won’t affect you, then why go on and on and on…. Let it be, and stop stressing over something that you can’t stop or change. Your stress levels will drop, and your heart will thank you. Calm down and enjoy life.
As an SMSF trustee I do not want advisers to be locked into mindless compliance with time wasting rules…..simply adds to costs for everyone. We want to reduce costs not increase them
What on earth are you on about Terry? I couldn’t give a toss if some of my clients go off to an industry fund or whatever…..I’m talking about the future of the industry and time wastage on failed reform policies. The big picture…you know?
Oh Gerry,
Just what do you mean by “…your little world of well-to-do clientelle…”? My client base is as diverse as most small practices. I don’t live off a few rich clients, and I resent your insinuation.
I work hard for my clients (medium and small) and they are all long term, and I see this as just reward for my knowledge and expertise, independence, regular communications and not relying on commissions for remuneration.
Your comments demonstrate that you see FOFA as diverting your less affluent clients to ISN. I was right then,it’s all about commissions lost as a result of FOFA.
It looks like you just might be leaving the industry, if as you say, you will ignore FOFA. Let’s see whether you have the courage of your convictions.
Awwww c’mon girls….if you can’t see the changes happening in the industry around you then I don’t know if my explaining it again will help. It would be easier to name the good parts of FOFA….but hey, here’s one for you. How come AMP planners get paid 4x BOLR when they sell their book of AMP policies, but the non-AMP polices are valued a lot less. No bias there eh? No politics either you’ll notice. Its just one of the things FoFA should have captured but maybe it doesn’t apply to the major instos. Anyway…..I agree….time to do some FoFA preparation, I mean client work (cough)
Gerry, You are correct, I don’t get it, and I never will ‘get it’ (your view) because my focus and my time and enery is applied to other things. I have not yet, nor do I intend to, sit around and worry that the sky will fall in on my head. The reforms have little impact on my current business.
You are happy to spend your time doing worrying, lobbying, etc that’s your perogative. I prefer to spend my time looking after clients and earning profits.
Perhaps one day you will be proven right and I’ll look like a dill, I’m willing to take that chance.
In the meantime, I’ll just keep looking after my clients and making profits while you potentially risk neglecting both while your efforts are distracted.
Have a great day, I’m off now. This is going nowhere.
Gerry and others
I am STILL in the dark as to what it is that is soooooo very wrong. Hype and innuendo BUT still NO answer to your assertions. Come on, share your knowledge or are you just a stirrer–come clean–its about time!!!!!
It’s the Terry and Dave show again….lol….and here’s your host, Kermit the Frog. So you guys don’t at all think there is something not quite right about these reforms….hmmmm? As long as it doesn’t affect your little world of well to do clientele why would you care I guess. It doesn’t affect me much either…..but you still don’t get it. The reforms are wasted policy…..what about vertical integration? What about Best Interest Duty…shouldn’t that mean our SOAs should be tiny one pagers now? Why do advisers create transparent portfolios with transparent fees, but no one else has to? Why did the FPA cut a deal with the ISN? Oh so many questions, yet so little answers.
But don’t worry Terry and Dave, it doesn’t affect you…..yet.
I respect the views of Gerry, etc in being weary of FoFA, etc, but am yet to hear of how my business will be impacted significantly in a practical sense.
I doubt my clients will ever be able to get what I provide (which the value and are very willing to pay for) from any ‘free’ service anywhere else.
To suggest that transparent fees for service is a trap and not a much needed progresion for our industry is just rediculous.
Any planner who doesnt embrace the concepts of opting-in, fee disclosure, etc must lack confidence in the value they are adding and fear losing clients. If not, what’s the fuss about? With todays technology and systems (and a proper client engagement model) the new requirements will add minimal time and cost to doing business. I know, because I’ve been running my business this way for 3 years now… Successfully, profitably and with better client feedback than ever.
Ahhhhh….. so that’s it!
Paranoia appears to be behind this. Is it you that is paranoid about ISN, or your clients? If your clients leave you for the ISN, then you are not communicating with your clients at all well. So the problem is you not FOFA.
Alternatively, your political bias has blindly turned you against FOFA? IT DOESN’T MATTER who is in power, they make the rules and we have to follow them whether or not we vote for them.
Present or future governments will have some form of FOFA arrangements.
I am personally a bit over the precious attitudes of some contributors, who believe that FOFA is the end of the world as we know it. Do they really have any knowledge or understanding of FOFA? Their posts suggests not.
So Jason Gerry et al
put us “blind” planners in the picture—and the secret agenda etc is???
Very keen to know if I and others are stupid or are we just running successful businesses and managing change very well.
gerry,
very well explained, its advisers that promote themselves as “we accept change” :we do the right thing” blah blah blah — that will ruin the industry. We have been set up and there is a agenda!!!!! You are awake while the others that are pro this rubbish are either asleep, Blind or working for the ISN network
Let me re-explain….i don’t give two hoots about how individual advisers cope with change and how they run their business to comply but thanks anyway. It is the nuts and bolts of this FoFA package that disgust me, okay? It was largely driven by the ISN…there is an agenda and i guarantee you….if advisers and the FPA etc. just keep accepting it, there will be more and more strangulation from ASIC. The transparent fee for service has turned out to be a trap. Have a look at ING Direct’s free super fund advertisement. OMG…they have a free super fund? how can that be? We’re now all disclosing our fees (over and over again) and providing full transparency, and guess what the competitors are doing now…promoting fee free, no adviser fees super and hiding the real costs somewhere else.
Have another look between the lines of this reform (cough) package.
#14 – GERRY, when I sign up new clients I tell them that at anytime if they are not happy or feeling like their fees are money well spent, they can contact the product provider directly and turn their fees off, but I ask them to contact me first to see if I can ‘make it better’. I tell them I need to earn their fees because my business relies on their continued business. I strive to provide an exceptional level of service (and charge accordingly) and have not had anyone turn a fee off since I started this business 3 years ago (in spite of rough markets for the first 2 years). I only have as many clients as I can adequately provide a personalised and quality advice service to and I touch base with them regularly via emails, phone calls, letters and reviews. My advice is proactive and goals based, not returns/lowest fees based. As long as the client is progressing towards achieving goals and feels like fees are money well spent, they will remain loyal clients.
It is interesting to see such negativity from my peers about an issue.
As one of our peers has said, how did we get here.
With a poll currently going about complusory association membership, one wonders on the benefits of these memberships when these associations either are out of touch with the industry they proport to represent or/and have no real political clout or influnce.
WOW. I can’t understand the negativity around this. A well run business with adequate systems and processes in place, a reasonable client engagement model and suitable fee structure (like mine) will hardly be impacted by the FoFA reforms. I can’t see any of the new requirements adding much time or cost to my business. I already get all clients to opt in annually and fully disclose fees vs services/advice and I have only a very small handful or legacy trail clients which are slowly being converted to non-commission products with either an ongoing fee or an initial fee and no ongoing fee (or service) – their choice. I understand FoFA and see little problems with the practicality of running my business and doing so profitably. To be honest, I havent given much thought to if the changes are good, bad or indifferent, because if it is unlikely to have a material impact on my clients or profitability then who cares. I focus my time and effort on the things I can control.
It goes against my values to adopt ill conceived policy. I’ll work on smarter solutions to survive in the interim until this cough reform is amended. If I don’t seen any meaningful reform changes that encourage independance and affordable advice when the coalition arrives, the industry can KISS my arse goodbye forever….
Terry et al
Amen, nothing else to say. Adopt or die as they say, accept or die or follow the words of wisdom from so many on this blog. KISS is so easy follow and implement. Maybe there is room for an open forum to simplify life for those finding it difficult to change. Happy to engage and contribute. The best aspect of this industry is peer group education, we all learn new ideas and smart ways to do business. Think about the concept.
Gerry,
Just as you are entitled to express your views, I am equally at liberty to express my own. That is what blogs are about.
Compliance with FOFA is mandatory, and whinging about it changes nothing. FOFA will not be replaced any time soon, as new governments take considerable time to prepare and implement new legislation. Whether you comply in the interim, is your choice.
Speaking of mantras, here is one for you. “Lord grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
Terry, Im not a big fan of adopting bad policy, ok? It’s as simple as that, so please stop with your adapt or perish mantra. FOFA in its current form will not last.
Whinging about FOFA is not going to make it go away. It is happening, and those who are prepared, will adapt. There is no choice.
It’s the same in many occupations, where the goalposts are constantly changing.
Those resistant to change will retire or change occupations.
Adapt or perish, that is the stark reality facing us today, and we have the product floggers to thank for it.
I strongly believe that better ongoing education and less pressure on advisers would have been more beneficial to the clients.
We need to stop being associated to “sales people” if we want to be considered as the professional advisers that we are.
The FoFA pressures won’t do anything to help us improve the perception clients have of our profession.
Politicians,stop treating super like a sport!
I don’t believe this piece of legislation will have any benefit for the clients. It creates so much more pressure on advisers to only invest time with the clients who can afford their increasing costs, I can’t see how the general public will be well served by this new set of rules.
I would have liked to see ASIC invest more resources in identifying, naming and shaming the con artists in our industry. There are plenty. Especially in the small firms since ASIC doesn’t have enough resources to adequately monitor their activities and they are deemed to affect only a small number of clients.
As everyone knows FOFA is a JOKE! A complete waste of time. A politcal agenda to tick a box. Who let it get this far? Why has the FPA stood back & fueled this over inflated compliance nonsense to grow into what it is today? Forget advising clients, just make sure you spend 3 days a week checking files, writing diary notes, pumping out fee agreements (aka commission in disguise), doing senseless compliance & giving out 50 page legal documents called SOA’s that no one ever reads but a complance officer & provide weak, fencevsitting advice that is super compliant. How did this industry let this happen? What a joke, every adviser has been hoodwinked & conned into education & training expenses by this hyped up compliance threat that for most advisers does not exist & will never exist.
FOFA is here, will it go probaly not only small modifications, we are setting up FDS with our a software. its a total waste of time the FDS is arse about before i pay for something i want to know upfront (as covered in the soA Fee disclosure) what’s the purpose after 12 months being told what a i paid & want i was entitled but what i received. So ???
I’m just reading my update from BT about their new FoFA friendly adviser desktop. From 1 July 2013 any new clients can opt out of their adviser ongoing fees at any time. We will notify you when that happens……how charming. I guess you get to keep your admin fees BT and then farm that orphan client off to one of your own? Let me guess….you’ll slip that ittle one liner in with your next direct mail campaign. I’m glad this is the first thing the coalition will remove.
Several years ago ASIC put out an 8 page recommended SOA that covered off on everything. As a result my dealership increased the then 56 page SOA to about 70 pages. I have 5 degrees (accountant in former life) and still find myself having to do exams(Kaplan) at the age of 48. We are forced to comply and demonstrate that we keep abreast of legislative changes via such resources and compared to my professional counterparts (lawyers, doctors et al) – I really do feel like I have been handed the wrong end of the stick. I have looked at all of this and see ultimate revenue generation for the government via mysuper as a primary cause for pushing the maniacal overkill of FOFA along with big backhanders from banks who have the staff to deal with factory line planning. Let the people look at the remuneration model of politicians and see if the public wishes to alter not only their pay structure but also the ridiculous archaic parliamentary system they still work under. What a joke!!
Stuart, you don’t think that making it hard for independently minded practices is in the interests of the big instos?
It’s got nothing to do with fear of displaying value, it’s about economies of scale with a one size fits all product solution for clients.
If you can’t see that Stuart I can’t help, sorry.
Wild cat. I thought I understood FoFA until I read about how it favours product pushers. That is why I asked for an explanation of how FoFA favoured product pushers. Your emotional response didn’t provide any detail or answer my question. Maybe I do understand FoFA after all.
Wildcat
can’t speak for others but I DO understand FOFA, we have re modelled our business over the last 18 months. I wonder what support -dealer group wise- are you receiving. Your software -be it X-plan or other should be stream lining some of the requirements. There is at least one NON aligned dealer group making it easy for their associates, without any obligations associated. Maybe time to shop around.
Dave and Stuart, maybe you two don’t understand the full impact of FOFA and the reason it favours not just the industry funds but the big banks. Hence the senate select committees heard nothing as smaller boutique licencees don’t have time or funding from in house product to fund the delegations to Canberra.
I have been fee for service by direct debit from the bank a/c for over 10 years, wholesale funds and off platform for larger clients.
What FOFA will do is for my business to survive I will have to tuck myself in under the skirts of a large insto, to thrive I will have to recommend nothing but insto product, this is in complete contravention of the idea of client best interest.
Just look at the annual fee disclosure requirements. Only a single platform only vanilla advice structure is remotely efficient under this framework.
It is dumb and stupid legislation from a colossally dumb and stupid government.
Wow, so much negativity. Use this as a means to re engage your clients, show them value, possibly move them to wholesale funds- less MER- possibly a way to introduce a new style fee and actually charge the same fee-or more. Don’t be afraid-to communicate with clients and you may be surprised by increasing business and revenue. We don’t like moving from our comfort zone but this is coming-adapt to it-be smart and make it work for you.
I’m confused. Why does FoFA favour product pushers? Don’t those advisers have to display value for fear of their clients not opting in as well. I see how it favours industry funds but not product pushers (aka banks).
There you go…..that’s what happens when you push the advisers into implementing policy they know is poorly conceived. What other outcome did you expect really? I mentioned the FDS to clients this morning, and their immediate reaction was ” I suppose youre going increase your fees”, to which I responded “yes….and by the way I notice you are drawing a fair bit down on your pension funds every year, more than what it earns. I shall implement a fixed fee to protect my income in case your portfolio balance keeps falling”
FOFA is a complete joke & waste of time. We will be increasing our fees by 30% to accommodate for the extra compliance work and passing that right back to the consumer. Prisons exist as an “avoidance” mechanism to stop people committing crime, does that still stop drug dealers and murderers? Hardly, so why do ASIC think that FOFA is going to stop shonky advisers? These types of people will ALWAYS exist! FOFA is designed for one thing only, to put the independents out of business and keep the big guns going so ASIC can fine them hundreds of thousands of dollars when things go wrong and manage a smaller amount of AFS businesses. It’s time to cut this incompetent cancer called labor out of our government, who have destroyed this country and this industry and replace it with a government who actually understands scale of economics and how important business is to this country instead of taxing and legislating it all the time!
fofa is simple, get rid of most clients, get rid of most staff, charge more with clients left and do everthing for them, shut your doors to new clients, hide away in s corner andbr quiet so the lefties can blow up what they think is right and start new business again when they decide planners are needed again.
A classic example of ill-informed decision makers thinking you can legislate to make others honest. A total waste of time.
If someone is Dodgy, making more rules and paperwork will not make them suddenly honest, caring and compliant.
It just hurts those of us who are trying to do the right thing at an affordable cost for clients.
Thinking of leaving the industry? Yes, but because I need to feed my family, not because I want to.
I have launched a retainer fee for service model to be effective 1 July 2013. Based on a 2 year plan just like a mobile phone or pay tv plan. Despite showing a lower client cost than current fully disclosed FUM charges, clients are resisting paying direct fees. The truth is they just do not seem to care about commission, they see it as a product provider cost not as a personal expense. As a result I fear Opt In will decimate my client base within 2 to 3 years, unless it is repealed by a new government. If my income dries up I will not have any choice other than to leave the industry, or God forbid, join the ranks of the most hardened product floggers in the industry, the banks.