Sentiment collapses post-FOFA as sharemarket falls

Financial planner sentiment has dramatically declined over the past three months amid a declining sharemarket and the reality of Future of Financial Advice (FOFA) implementation, according to the latest Wealth Insights data.

The latest Wealth Insights Adviser Sentiment Index released exclusively to Money Management has revealed the scale of the collapse in sentiment from a return to pre-global financial crisis (GFC) levels in November and December to the lows of 2011.

The index fell from 50 points in January/February to 36 points in July.

Wealth Insights managing director Vanessa McMahon pointed out that the proportion of advisers saying times are ‘bad' or ‘very bad' had doubled in the past two months from 6 per cent to 12 per cent.

She said this outcome seemed to reflect a number of factors including the markets and the realities confronting planners in implementing FOFA.

"Concerns around the work involved from the FOFA reforms, particularly the fee disclosure statement, is contributing to the drop in sentiment," McMahon said.

She said investor behaviour had also become slightly more conservative in the past two months with more advisers reporting clients were "staying put".

McMahon said the decline in sentiment over the past three months had been one of the most dramatic recorded by the index since the dark days at the height of the GFC. She said it was rare to witness a doubling of the number of planners reporting conditions as being ‘bad' or ‘very bad' — something which seemed a result of the pressures generated by FOFA and by some broader uncertainties.

McMahon said she sensed that there would be no general improvement in sentiment until there was greater clarity about underlying FOFA issues, the markets and the forthcoming federal election.