Much of the debate around the Future of Financial Advice (FOFA) reforms has focused on commissions, and the degree to which the existing system needed to be reformed.
While some advisers have been ‘heads down’ busily preparing for the move to a FOFA-compliant business, others have been more ‘heads in the sand’, waiting to see final regulations, receive instructions from their dealer group or kick the can down the road.
Well, the time for debate is over. Commissions from investment products – regardless of the pros and cons of the respective remuneration system – will increasingly become a thing of the past, and as the industry heads towards greater maturity and professionalism, the move to a fee-for-service model will support that.
While fee-for-service has its critics, it is now a part of the landscape and all advisers will need to develop their businesses as a result.
Our cover story this month (page 18) takes an in-depth look at the various fee-for-service models that are emerging as ‘contenders’ for adoption in the post-FOFA environment, with advice practices eyeing the benefits of each and weighing up which model will best fit their business.
Our editorial team spoke to a range of business experts as well as advice practice principals. For those who are yet to choose a model, or who are weighing up a number, this feature will provide plenty of food for thought.
But even for those businesses and advisers that are already FOFA-compliant, the message is universal: you need to know exactly what it costs to run your business, who your clients are and what your value proposition is – and be willing to re-evaluate.
The ban on conflicted remuneration, a key FOFA reform, will have far-reaching implications not just for advisers but for the entire financial services industry. Platform providers will be caught in the middle, with both the payments from fund managers to platform operators and from platforms to advice providers to be impacted.
How the entire value chain manages the transition has become a central focus for the industry and will no doubt be one of the most stimulating topics discussed at our upcoming Wraps, Platforms & Masterfunds Conference.
Now in its 13th Year, the Wraps, Platforms & Masterfunds Conference is an industry institution. With the FOFA reforms set to bring dramatic change, and with all the uncertainty that comes in an election year, the discussions and exchanges of views are sure to be intense.
‘The Next Frontier’ is a fitting theme for this year’s event, giving context to current market conditions while offering insights into the evolution of the sector. It brings with it the opportunity to discover how financial services businesses can capitalise on changing consumer behaviour to enhance their intermediary proposition and boost their bottom line.
It’s a must-attend event for all businesses that leverage intermediary distribution, whether platform provider, fund manager, dealer group or adviser, and I look forward to seeing you there.
If you’d like more information on the event, please visit www.masterfundsconference.com.au or give us a call on (02) 9922 3300.
I hope you enjoy this issue of ifa; please feel free to get in contact should you have any feedback.
Sincerely,
Phillip Tarrant
