Over 80 per cent of financial services chief executives believe the Future of Financial Advice (FOFA) reforms will drive up the cost of operating a financial advisory network.
A Financial Services Council (FSC)/DST survey of 86 chief executives found that the cost of advice would be driven up by the cost of changing operating systems, training staff, and obtaining legal advice to ensure regulatory compliance.
FSC chief executive John Brogden said that while the MySuper reforms would have real benefits for consumers (such as the ability to electronically consolidate their superannuation accounts with the tick of a box), FOFA would deliver few benefits.
"It's more about cultural changes with respect to the delivery of advice … In terms of the immediate and mid-term flow-on benefits to consumers, we don't see any reduction in costs," said Brogden.
"In fact there's more likely to be an increase in costs that will be fixed rather than short-term, in order to deliver the reforms," he added.
Ninety per cent of the chief executives surveyed said they expected FOFA to result in a decline in the number of firms offering financial advice.
The post-FOFA environment is likely to be particularly challenging for small, independent financial advice firms that will struggle under a complex and costly regulatory regime, according to the survey.
Contrary to the stated aims of the Government, only 20 per cent of the chief executives surveyed expect FOFA to encourage more Australians to seek out financial advice.
Forty-four per cent of respondents said that the reforms would cause a decline in the number of Australians seeking advice.
