The financial advice industry is in a state of flux with the cost of advice rising, making it challenging for advisers to run viable businesses without passing the some of the cost on to clients, according to HLB Mann Judd head of wealth management, Michael Hutton.
He said that with adviser numbers falling in the wake of the royal commission, it represented both the best of times and the worst of times for financial advisers as they sought to find a way forward.
“Many advisers are leaving the industry, for various reasons including education pressures, compliance burdens heightened by the Hayne Royal Commission, and the big banks closing down their financial advice arms in order to mitigate risk,” Hutton said. “As a result, we are seeing extensive fragmentation of the financial advice industry, with many advisers seeking new licensees or getting their own licence.”
He said that for these reasons the industry was in a state of flux and for those who remained the transition would not be easy.
“The silver lining to this is that, with fewer advisers around, those that embrace the new regime and do it well are likely to experience increased demand and see their practices grow.”
However, Hutton said that the most serious issue was that, as a result of the change and the fall in adviser numbers, many Australians were likely to miss out on financial advice.
“The cost of providing advice is rising, making it challenging for advisers to run viable businesses unless they pass some of this cost on to clients,” he said.
“Meanwhile, the complexity of the financial environment, including tax and superannuation rules, is also increasing, making it more necessary than ever for people to get professional help to ensure they fully understand their situation and make the most of it.”