There is a dark side to the changes impacting the financial advice industry – the deteriorating mental health of those advisers caught in the pincer of a tightening regulatory environment and declining business valuations.
That was the assessment of former financial planner and founder of PFM Australia an Alliton Capital, Barry Daniels, who warned of mental health distress brought about by industry reform fatigue, constant legislative/regulatory changes and reputational damage to financial services.
He said these factors were contributing to many advice practitioners making the decision to terminate their careers and exit the industry.
However, Daniels said the situation was not being helped by the Government and the industry failing to acknowledge the very real mean health issues being faced by financial planners and their families.
“The prospects of further significant industry reform beyond the Hayne Royal Commission that followed the Trowbridge Report, Life Insurance Framework (LIF) and education requirements has exhausted many – especially mature age planners,” he said. “Hence the decision that sees so many capable planners preferring retirement to continuing their careers.”
Daniels said that adding to their distress was the fact that planners seeking to exit the industry were selling practices in an environment of rapidly falling values for advice businesses.
He said many planners, equally, had structured their retirement plans on resale values or Buyer of Last Resort (BoLR) arrangements to fund exit and retirement aspiration only to find these plans were now in tatters.
“Business brokers can attest to the mental anguish and tears of planners not only concerned for their own well-being, but those of their staff and the ongoing financial servicing of clients,” Daniels said.