Impact of reforms on planners is ‘catastrophic’

Many financial planners will exit the industry in the new year as two decades of reforms has put too much pressure on preserving planning businesses while they lose value, according to a former planner.

Former financial planner and founder of PFM Australia, Barry J Daniels, said the stress of ongoing legislation change and uncertainty could manifest into planners suffering illness.

“Very few legislators see (or even appreciate) the world through the eyes of self-employed financial planners dedicated to protecting the financial well-being of clients – as employers providing jobs – contributors to the economy as tenants and customers buying equipment, cars, etc.,” Daniels said.

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“All this while simultaneously being forced to deal with nearly two decades of unrelenting reforms, scrutiny, new processes, compliance and unprecedented administrative burden that commenced in 2001.

“Changes that primarily mandated modifying remuneration arrangements with little consideration or appreciation of the complexities and costs associated with providing clients professional advisory services.

He said the impact on businesses, clients, staff, families, finances, and mental and emotional wellbeing of mature age planners had been “catastrophic”.

Daniels noted that while planners found themselves staring at “imminent economic uncertainty for themselves and their families” they were “underappreciated” in helping protect the financial welfare of individuals, families and businesses which had benefitted the economy by “ensuring the public purse and government welfare agencies were not burdened financially”.

He also said that there was an “immense gulf and disparity of incomes derived by small and media enterprise planners and remuneration packages and salaries of senior bank managers and financial institution executives”.

The reduced competition as a result of constant reform, Daniels said, would be at a great cost to:

  • Consumers forced to pay more for advice or turn to impersonal robo-advice to address their needs; and
  • A significantly reduced pool of professional planners as many mature age planners reluctantly cease their business activities and exit the industry to uncertain lives in retirement – with a great number doing so in poor health (mentally and physically) and financially; and
  • Increased costs to tax payers, through the inevitable decline in insurance coverage leaving those who have been beset with illnesses and disablement to lean even more on the public purse.

However, Daniels said that the new era of advice professionalism would be filled with “opportunities and financial success as they look after a vastly reduced number of members of the public, who will be able to afford advice under the new regime”.

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Barry has hit the nail on the head. A very sad outcome for those who have been involved in the industry and over that time assisted many people to realise their financial dreams.

The politicians who have ruined our abilities to provide cost efficient and affordable advice to their constituents will retire on a fat pension whilst those constituents who cannot afford year 2020 and beyond advice will end up on the age pension or even disability support as they won't have been advised as to the correct types and levels of insurance to hold.

I still care more about my clients than I do for myself and agree with everything Barry has said. I know that I no longer have the resilience that I once had and my retirements will be nothing like i thought it would be even twelve months ago.

Now that's the MM article of the year. Two big fat thumbs up from me.

It's been catastrophic to the point of causing illness for the younger planners too. Doesn't take a brain surgeon to work out that advisers need their own peace of find and financial stability in order to assist others find the same.

Depressed / highly strung people in control of your financial future should be equally alarming as one sitting in the captain's seat of the plane you're about to take off on...

planners can take heart. we won't suffer alone.

the whole Australian community will suffer from this for a long time. I actually don't think they have thought through the ramifications very well.

journalists even from mainstream media are already lamenting this fact.

financial advice should be affordable and accessible to all Australians. period. it is not, and becoming increasingly elusive and only for the wealthy who don't need any more help from me, it's middle Australia who needs our help most

most of all I blame the executives at ASIC people like Peter Kell who have had an ideological dislike for financial planners and has seen to it that their existence is a miserable one

if you want to blame someone for this it has to be ASIC and the incompetent and hopeless people working there who have no idea it's all too late now though.

4,000 have left already and many thousands more will leave this year

The irony is the desperate measures some may be pushed into (ie our mates at AMP dealing with reneged BOLR's and outstanding practice debt) will probably force an increase in criminal / fraudulent behaviour out of necessity. Either that or adviser claims on their own TPD and IP will create further losses for the Life industry.

The Laffer Curve comes to mind as a useful analogy, although people are willing to pay their fair share of taxes, tax them too much for too long and watch their priorities change from tax compliance to tax avoidance.

Maybe those in Canberra will realise the complete stuff up when they near retirement and need to engage a professional to help them make sense of of their numerous complex Public Sector super / pension schemes, no doubt our advice fees to assist them then will be the eye opener they so desperately need.

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