Wealth coaches and 'finfluencers' next bubble to burst

Wealth coaches and ‘finfluencers’ will be the next bubble to burst and financial planners will bear the brunt of any wrongdoing, according to the Financial Planning Association of Australia (FPA).

FPA chief executive, Dante De Gori, said the latest danger and risk to come out of the increasing cost of advice was the emergence of wealth coachers/finfluencers and advisers getting into the wholesale game to avoid obligations and regulatory red tape.

“One main reason of this emergence is that it’s too costly and complicated to deliver those services in the current regime. Financial planners should be able to service consumers at any price point they wish as it is their business models and again we don’t have to force advisers to service low income earners but there should be business models that cater for that at least more so than we do today,” De Gori said.

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“We should not have to force advisers to leave the licencing regime altogether to become wealth coaches and should not be forcing advisers to go into wholesale business to avoid the red tape and to force consumers to go into a lesser consumer protected regime.

“If there’s a wrongdoing by a wealth coach or finfluencer or in the wholesale space, it’s going to come back to the planning space and financial planners will bear the brunt and that’s irrespective of who is involved and we shouldn’t kid ourselves thinking that won’t happen.”

De Gori said those operating outside the regime had no statutory obligation to act in their clients’ best interests and that they were not watched by the corporate regulatory, so consumers had no protection or compensation.

“That’s the next bubble that’s going to burst and it’s going to look bad for us if it does,” he said.

De Gori said there was a role for wealth coaches in terms of educating consumers who wanted to do things themselves, to help verify things, or to have someone coach them along without necessarily giving them advice.

He noted that there were always going to be Australians priced out of private financial advice but that in industries like medicine there was the Medicare system and in law there was Legal Aid.

“We think it should be a human right for Australians should get advice on finances and get financial control of their situation and to have access to a qualified financial planner,” he said.

“There’s a gap. At the bottom end where people are in financial crisis and debt crisis there are financial counsellors. Then there’s the point where financial counsellors won’t intervene because unless you’re in financial crisis or debt crisis they won’t help you.

“Then there’s a gap between a group of Australian who depending on what decisions they make they could be the next group of people that get into financial distress but if they make the right decisions they could be on their way to getting control over their finances. But they’re not in a position where they can afford a financial planners so there’s that gap.”

De Gori said this space could be filled with not-for-profit advice and be funded through a combination of government and industry that would fund a pool of advisers to give pro bono or to work in this space full time to support and give advice to Australians who could not afford to get advice from privately owned financial planning businesses.

“There’s precedent here – in the UK they’ve done this model specifically to assist with pensions advice,” he said.

“Something similar could be started here in terms of retirement, what to do between accumulation and starting your pension. Perhaps an opportunity that could be a starting base in which everybody who is about to retire is entitled to get independent financial advice.”

De Gori noted that the importance in this was that it was independent advice rather than intra fund advice which, he said, could never be independent.

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It's interesting that Dante doesn't support Intra Fund, but Ben Marshan does and frequently - so is there an ideological split in the FPA? It's very confusing there position, but they are clearly in catch up mode no doubt having lost members.

They are both more interested in their post FPA careers than sticking up for financial planners. Anything they say should be looked at in this context.

hi yogi,

all membership organizations exist to sell their products, mostly education courses, and cpd courses. ask the 180,000 members of CPA and ca anz, I have not met a single one that is happy.

the ca members continually moan about how the ca anz is the "lap dog" of the big 4 accounting firms and not interested in their small public practitioner members. many of them like members of the fpa keep staying members for statutory registration purposes, e.g. smsf auditor, company auditor etc.

the people who are in the management of these organizations could care less, they pay themselves and benchmark their salaries to ASX 200 coys.

once they have gained a bit of transaction at members expense they move on to bigger and better. just check out where Lee white (ex-president of the ca anz works). he travelled business class whereas many members of caanz who pay the annual fee have been decimated by the advent of new technology and are mere and glorified bookkeepers eking away a meagre living by working from their garages.

it hasn't been about members for a very long time. biggest revenue-raising scam. people are just catching on to it now.

let's not worry, let's do the extra study, get the registration ourselves, and then we don't have to worry.

just do the study.

You can be sure that whenever one of these unlicensed "finfluencers" gets caught ripping people off, ASIC/SMH/ABC will deliberately and deceptively refer to them as a "financial adviser".

what I have learnt by being in business for over 21 years is that if you leave "others" to craft your brand and image and do not meticulously manage its perceptions yourself (and protect it, and defend it) others will do it for you. and they will do with it what they like.

that is exactly what has happened to financial planners. now it's too late as that perception is so deeply embedded in the consumer's psyche by the repeated proliferation of misinformation by the media about financial planners. and we have sat idly by, and our associations have sat doing well... nothing until now and it's way too late to change that perception. it will basically take a reduction of numbers down to 5,000 where every single planner has an m.fin plan and a doctorate both. until then no chance. it's good to see many are embarking on this journey on their own accord.

until that happens be comfortable with:

any fraudster - is a financial planner (or was formerly a registered planner) so let's just call them a financial planner it's easy for the consumer to identify with

the butcher who puts red ink to sell his mince - yep, financial planner (or was one before)

finfluencer - was a financial planner, could not cut through red tape so yep, financial planner still

a criminal former doctor or lawyer - let's just call him a financial planner it's easy no one will believe a lawyer or doctor is criminal we have to sell clicks so financial planner it is

greedy tradesman - yep financial planner - they almost always are who was that guy Don from CBA yep, financial planner

when you ask a cohort of consumers what they think of financial advisers they will tell you the following :

a. rogue

b. cowboys

c. uneducated

d. unethical

e. need to be careful with and protected from

f. unprofessional

g. snake oil salesman

so, friends, we have a long hard road ahead of us. and no one is going to make it easier for us.

Ah Dante, what a rabble of thought bubbles.
Sure there is some merit in a Financial Advice Aid model.
But Dante, the Real Adviser problem is the most over regulated advice process in the world. Utter strangulation of advice by BS over regulation from Frydenberg, LNP and then ASICs own paternalistic interpretations.
Real Advisers have given up on the masses that need advice, too hard, too costly and no reward and there are plenty of the top 10% to 15% wealthy that need and pay for our Advice.
Dante, if the FPA ever pull your heads out of product influence and sponsorship you may realise the travesty of over regulation is the 40% to 85% wealth bracket of mums and dads that could really benefit from good advice but can’t afford it. They are not going broke but need help going forward.
If only the FPA wasn’t so conflicted it may help but sadly it’s a diseased sinking ship.

Interesting that Dante is stating that Advisers will be incorrectly targeted for the wrong doing of non-advisers. But he does not appear to suggest the solution is to change the legislators and authorities???? Rather just accept the abuses will continue.

Dante is only concerned as wealth coaches aren't forced to be members of his rubbish association in order to give advice.

Like yelling shut the gate when the horse has bolted. I wish the FPA/AFA etc had been a lot more vocal from the start.

Both AFA and FPA were too busy trying to protect their own patches. Yes, agree there will be growth in the financial ‘coaching’ space going forward.

The FPA have contributed to the over regulation of Advisers. The strategy of "let's just wait...we don't want to offend any licensee's that sends us members" has done just as much harm, if not more, as the Adviser that steals from clients and makes headlines.

The Barefaced Investor would never do anything wrong…surely!!!!
He just gives general advice, flogs books, conducts “ financial education” courses in schools, promote his brand on ABC, and is just a smiley happy guy that “ helps “ people with planning for their money needs!!
Surely the public couldn’t possibly believe that his general advice could be directed straight at them and be perceived as personal advice could it ??
Good old Bareface Investor, he wouldn’t hurt anyone, because he is one of the good guys isn’t he????????

Bare arsed investor you mean. If ASIC wasn't so corrupt, they would have pounced on him like they did the other high profile media personality, Sam Henderson. Except of course Sam was a FP scalp to add to their collection whereas Bare Arsed supposedly isn't so is of no interest.

And where is the minister Hume , ASIC and all the other comete dopes who continue to monster our profession? Where are they on this issue, the Bare foot investor charlatans? Meanwhile, the media not only fails to call them out for the unqualified, unexamined shysters they are, instead they are embraced and given television programs.

The Liberal Party have effectively and single handedly destroyed the financial advice business.
They have overseen the pre-determined dismantling and degradation of an industry when they claim to be the party of small business.
They are not.
It has been orchestrated and supported because the people in charge like Morrison and Frydenberg have philosophical opposition to financial advisers…it is blueprinted in their DNA.
I cannot recall the last time I heard Scott Morrison even mention the word financial services or advisers…he simply doesn’t care, dies the understand and doesn’t wish to.
Frydenberg is our opposition.
He is completely unsupportive on every level.
Malcolm Turnbull was pathetic as a leader and silent. He is now the ABC’s “go to boy” for commentary on just about anything.
The Liberal Party has not only been 100% unsupportive, they have in fact delivered the ammunition and pulled the trigger.
They are an abject disgrace.

Anyone blaming the LIbs and 'preferring Labor in Gov' is a moron, typified by a hard line narrow sighted intransigent view on this issue.

Libs simply don't care, and really why should they. We are a small disjointed ineffective bickering group that would be nothing but a pain in the arse for any politician or political party to back.

Labor have it very easy and defined. They want us gone completely and the industry/union super to inherit everything as they are 100% aligned financially and philosophically.

Any moron who is holding out hope that "Labor can't be worse" is a delusional inept mouth-breather.

Yes a number of our fellow FP's are culled & by and large that is fair enough - I know a number who call themselves planners who are at best simply bad and at worst completely damaging to clients and I hope will disappear.

History in all facets of business have shown there is only one eternal truth - adapt or die. I am certain wagon wheel makers were lamenting the advent of cars and screeching that 'the gov isn't doing anything to help us' whereas those who changed to the new paradigm survived and thrived.

Get over your whingey little b*tch phase, grow a set, make some hard changes and survive or else get the hell out of the pool and make way for others who know how to run proper FP businesses.

Very well articulated! Agree.

Only addition is to state the fact that ASIC is corrupt

I think ASIC and other regulators see themselves as appointed and empowered to zealously protect the ignorant and downtrodden in our society. So they are not so much corrupt but rather using the laws to achieve their ideological aim of protecting the bottom of our society. Their actual result is destroying the other 75% of society, but this is ignored. I see the same approach with my adult child. My child is a teacher and has been trained to pace the teaching to the bottom 25% of the class. Of course the top 25% are bored and disengaged and their performance drops off to match the expectations of the bottom 25%. But as a society we strongly support this approach.... Interested to hear what others think?

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