Adapting to change painful but necessary
Adapting to change amid an environment of tighter margins across all sections of the financial advice industry is necessary but will threaten advisers' sense of certainty, autonomy, and risk their lifestyle and reputation.
Such was the opinion of the Association of Financial Advisers' (AFA) chief executive, Brad Fox, who also told the AFA 2016 National Adviser Conference last week that the greatest challenge for advisers was to grow market demand.
Referring to a leaders' forum summit held by the AFA in May, Fox said he heard advisers telling him that the paradigm for advice had changed and the market had shifted.
"The evidence is there on the squeeze on margins, whether that's in your advice practices, for you as individuals, self-employed advisers, whether that's in platforms, whether it's in life insurance, whether it's in managed funds, there is a margin squeeze," Fox said.
"This is clear evidence of when the paradigm is being disrupted by a combination of new entrants, new market conditions, it requires new solutions, and probably new business models."
Fox said the daunting task of adaptive change would make advisers feel threatened in many ways and lead advisers to question if they could maintain their income among other things.
"If I change will it work? The sense of autonomy is challenged: why am I being forced to change? The relatability to others is at risk, your peers. If you change will they accept you for having changed? The sense of fairness is questioned, perhaps broken," Fox said.
However, Fox emphasised the need for collaboration among advisers to adapt to change even as the AFA extraordinary general meeting looms today to vote on a proposed resolution on the life insurance reforms.
He said advisers must collaborate with their peers to experiment and integrate present practices with future strategies, and then share results with peers to keep ahead of the competition, Fox said.
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