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.
“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”.