While much remains unresolved about future government policy and the ultimate shape of financial planning regulation, a good deal is already obvious. Change is inevitable.
As Australian financial planners close out 2009, it is worth reflecting that while much remains unresolved about future government policy and the ultimate shape of financial planning regulation, a good deal is already obvious.
Change, though perhaps not radical change, is inevitable.
Planners need not await the Government’s response to the recommendations of the Parliamentary Joint Committee on Corporations and Financial Services.
Nor need they await the findings of the so-called Cooper Review into superannuation. Business models formed around commissions-based remuneration will not survive in the long term.
Those planners who have not already done so would be wise to transition themselves to a fee-for-service model.
Dealer groups that have not already done so would be wise to consider the ways in which their commercial relationships with product manufacturers might need to be altered.
Vertically integrated financial services conglomerates will also need to closely examine their modelling and accept that product manufacture and sales must be separated from advice.
In this week’s edition of Money Management a number of industry players have sought to sum up 2009, and if there is a common theme it is that we are about to end what has been a watershed year for the financial services industry.
The dictionary definition of ‘watershed’ is “a critical point that marks a division or a change of course; a turning point”. This year may not, in the end, prove to be the actual turning point for the financial planning industry.
However, it may, in 12 months’ time, be regarded as having represented a point of no return.
While the Henry Tax Review is scheduled to report to the Government this month, it will be early July next year before planners know the final shape of the recommendations from the Cooper Review.
On that basis, the reform agenda needs to be viewed in the context of the 2010-11 financial year and a Federal election.
Governments that find themselves significantly ahead in the polls are not given to unnecessarily controversial gestures, and planners should be grateful that history has shown that financial services reform has always proved too arcane to become an election issue.
That said, planners should be hoping that the industry can avoid further major controversies. The collapse of Storm Financial marked the start to 2009. The industry needs a fair weather start to 2010.