The future of the Australian financial advice industry is being shaped before our very eyes by powerful forces whose impact will be felt for decades. There are changing consumer demands, shifting demographics and a significant overhaul of the regulatory system. These forces are redefining how financial advisers develop services, how consumers expect those services to be delivered, and the standards of conduct and qualifications demanded of financial advisers.
Embracing change
While the changing advice landscapes presents a confronting environment for advisers to be operating in, it is also one that presents significant opportunities. As the industry continues to increase its education requirements, advisers who can successfully adapt and evolve what they do – and how they do it – will find themselves in a strong position. They will be trusted and respected by the community as professionals offering a valuable service, and catering to a rapidly growing demand for financial guidance and advice. The forces shaping the advice industry are intertwined and closely related. Essentially, financial advisers face a number of concurrent challenges. They’re being pushed in one direction by the Financial Advice Standards and Ethics Authority (FASEA) to upgrade their formal qualifications. They then also face pressures from the ongoing effects of the Future of Financial Advice (FoFA) laws, and the findings of the Hayne Royal Commission, to deliver advice in a way that clearly and demonstrably serves the best interests of consumers. Further, they’re under pressure to develop relevant value propositions as more individuals begin to grapple with how to best provide for their own retirement.
Yet, demand for higher education, professional and ethical standards may not have reached the crescendo it did if it weren’t for the Royal Commission. The issues of misconduct and poor client outcomes naturally become bigger when there is a pressing need for more people to seek financial advice.
For instance, with over five million baby boomers reaching retirement age in the next 12 years, the demand for advice is only going to rise. Many Australians will be seeking to become self-sufficient retirees and financial advisers will play a critical role in helping them achieve this goal. These clients will no doubt need closer ongoing management and reassurance to remain on track, and so advisers will need to structure their businesses accordingly.
Product providers have a responsibility to support advisers by developing retirement solutions that provide meaningful outcomes for retirees. Products need to address the financial and emotional issues many retirees face, but also support advisers in delivering professional and ongoing services.
And the winners are…
The winners will be those advisers that rapidly embrace the opportunities presented by regulatory reform, consumer demands, and the needs of an aging population. Will you be one of them?
