While FOFA and a number of other factors have seen many planners moving under the umbrellas of the major banks and institutions, the independent financial advice sector is alive and well.
As Mark Twain (Samuel Langhorne Clemens) succinctly put it in 1897, “rumours of my death have been greatly exaggerated”.
And so it might be said of financial planners not strictly aligned to the major banks, insurers or AMP in 2012.
While it is certainly true that the Government’s Future of Financial Advice (FOFA) changes and a number of other factors are resulting in consolidation within the financial planning industry – with many more planners moving under the umbrellas of the major banks and institutions – it is far too early to begin writing the obituary of the independent financial adviser (IFA).
Notwithstanding some quick and dirty analyses written by some opportunistic consultants, IFAs remain alive and well in the financial planning industry.
Indeed, had those opportunistic consultants taken the trouble to scratch only a little below the surface they would have realised that there exists a hard core of planners and advisers who are intent upon remaining non-aligned.
What those consultants might also have considered is the number of clients who quite specifically select planners because of their non-aligned status and their ability to deliver an on-going one-on-one relationship.
Contrary to at least some analyses, the financial planning industry is not about to be overwhelmed by “industrialised” advice and marketing delivered by via clever software, busy call centres or online calculators, although those developments will have their place.
Financial planning will remain a relationship game and a little bit of history might also have assisted the consultants in understanding this.
If they had examined the make-up of the financial planning industry some 25 years ago, they would have witnessed a sector strongly dominated by the major banks and insurers but which, over time, gave birth to independent planning practices and non-aligned dealer groups.
Simply put, the financial planning industry is in a state of perpetual evolution influenced not only by legislation and regulation but by the global economy, consequent market conditions and the mind-sets of individual players.
Apart from FOFA, the other important ingredients in the financial planning mix are the incremental involvement of industry superannuation funds in the financial planning space, the rules around the provision of scaled advice, and the increased regulatory powers handed to both the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
Planners now broadly understand the implications which will flow from the FOFA changes, and they know that the provision of scaled advice will be the province of those of the appropriate scale and infrastructure.
They are yet to see the full extent of ASIC’s regulatory oversight.
The bottom line, however, is that while the industry is undergoing a period of consolidation, and while the number of dealer groups will be reduced, reports of the demise of the IFA are very much premature.
