Stringent compliance regime self-inflicted
Adhering to the Future of Financial Advice (FOFA) reforms and the compliance regime may have added to the cost of financial advice but this is a self-inflicted wound by the financial planning industry, one practice principal said.
Epona Financial Guidance founder and financial planner, Lisa Duggan, said that while she hoped the industry would reach a stage where things stabilised and balanced out, the current situation was a result of the industry failing to address some of the bad practice in the past.
This included commissions, charging fees for service that was not delivered, and low education level requirements.
"If we weren't as an industry going to stomp this stuff out, it had to be legislated out. You've seen all the press about the negative outcomes in terms of people focusing on product sales rather than strategic advice," Duggan said.
Duggan said compliance requirements had become noticeably more stringent during her 20-year career thus far.
"If we started moving towards a profession earlier and addressed some of these things, perhaps those negative things wouldn't have occurred and as a consequence, we wouldn't have been legislated so heavily."
However, Duggan also said many people were relatively unengaged with the industry and had missed the press altogether on the issue.
She said the onus was on advisers to explain the value of providing holistic advice on issues like people's superannuation, insurance, and how they were linked.
"Who in reality really cares two hoots about their super fund? There are tonnes of similar super funds. Most clients, as long as they've got a super fund, they're fairly happy about that," she said.
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