A significant number of financial planners believe the implementation of the Government’s Future of Financial Advice (FOFA) changes will not only cost them money, but also lose them clients.
That is the bottom line of a survey conducted by Money Management last week, with a significant number of respondents claiming that the advent of the two-year opt-in would result in a loss of B and C clients.
The survey also confirmed a belief amongst planners that the administrative costs around the two-year ‘opt-in’ would be significant.
Asked what they believed would be the cost per client of handling the two-year opt-in, 18 per cent said it would cost $100 while a further 49 per cent said it would cost more than $100 per client, with 14 per cent suggesting it would cost in the order of $75 per client.
The survey outcome is significant because it follows on from suggestions made during recent Parliamentary Committee hearings that the Government no longer accepted the $100 per client industry estimate first referenced by Treasury officials.
The Money Management survey also suggested many financial planners expected to lose a proportion of their B and C clients as a result of the opt-in arrangements.
Asked whether opt-in would alter the make-up of their client base, 44 per cent of respondents said they expected to lose a proportion of their B and C clients, while a further 23 per cent said they would be actively focusing on just their A and B clients.
Thirteen per cent of respondents said they did not believed opt-in would significantly alter their client base, while a further 11 per cent said the only clients likely to be affected were those with whom they had only irregular contact anyway.
Confirming the planning industry’s generally negative view of the FOFA changes, the survey found that most respondents believed the Government’s proposals would have an overwhelmingly negative impact on their businesses.
Asked whether they believed FOFA had created opportunities or just threats, 62 per cent of respondents said the changes contained no benefits and only threats.
However, 31 per cent of respondents acknowledged that while the FOFA proposals contained threats they had also created opportunities.
The results follow on from an earlier survey indicating strong support for the industry to pursue legal action challenging key elements of the FOFA proposals, particularly opt-in.
