Advice Business Sustainability in 2013

What three issues will have the biggest impact on the profitability of your advice practice in 2013?

  • FSC 3-year responsibility period (28%)
  • Opt-in implementation (22%)
  • State of the national economy (11%)
  • APES 230 commissions ban (11%)
  • Investment/super commissions ban (10%)
  • New advice business model (9%)
  • Transition to fee for advice model (6%)
  • Other issues (3%)

At the beginning of what is certain to be a year of change for the financial advice sector, our first poll for 2013 is asking you to consider the year ahead:

What three issues will have the biggest impact on the profitability of your advice practice in 2013?

This time last year, FoFA loomed large, where the greatest concern for advisers was the implementation of the opt-in process by 1 July 2012. With opt-in now pushed back to 1 July 2013, does this issue remain your greatest concern for the sustainability of your business?

Do you see a positive, ‘up-side’ this year? Are you changing your business advice model to reach the next level? Are you transitioning to fee for advice to ensure compliance and a more sustainable business model?

Or do you see more down-side? To what extent will your business be affected by the Financial Services Council’s three-year responsibility period policy on replacement life insurance business? How many of you will be impacted by the Accounting Professional and Ethical Standards Board’s plan to ban its accountant members from receiving any commissions, including risk insurance?

We know that many advice practices will face similar issues in 2013. You are not alone! But each practice will also experience its own, unique issues, which will have either a positive or negative impact on the sustainability of the business. While there are many possibilities, we are asking you to pick the three issues from our short-list that you think will have the greatest impact on your bottom line this year.

As always, let us know what you think, as you gaze into your crystal ball for 2013…

6 Responses to Advice Business Sustainability in 2013

  1. Kenn Williams January 9, 2013 at 3:51 pm #

    The rapid pace of so much change for our industry will the biggest challenge for our business models into 2013 and beyond. The heavy and zealous hands of the regulatory and Political environment,and the apparent disconnect with the practicalities of how we are to remain both profitable and client centric amidst the commercial pressures of the pointy end of the/our world are indeed the big challenges. Adapting to the needs of our Licence holders as they stive to manage and enforce the new FoFA doctrines will be an enormous challenge in its own!!
    We will, as always, adapt. However there will be numerous casualties from a number of causes relating to an unwillingness to adapt to,or an ignorance of these changes, none of which will be optional or patient, or in the least forgiving. As I see it!!

  2. bigal January 9, 2013 at 10:13 pm #

    My biggest hope is that we get rid of the toxic and incompetent mob in Canberra trying to run this country. That is my main concern. The rest I can cope with and control.

  3. GPH January 16, 2013 at 7:34 am #

    The biggest problem I see here is that a lot of the protest falls on deaf ears. But then I believe that essentially all of the current ministers in the federal government have never actually run a business or had to earn an income reliant on performance. And disturbingly a history of entitlement and corruption is emerging . There is a call for quota’s for women in politics, how about a quota that represents self employed, women and employed alike ? Mind you I can’t see too many union reps joining the LNP , simply put , this lot has to go.

  4. Paul January 16, 2013 at 9:23 am #

    The FSC’s 3-yr responsibility period is likely to drive older advisers from the industry and will impact on revenue of many others. Really, such a proposal is anti-competitive and will only add to the under-insurance situation in Australia. It seems that the government wants to drive advisers from the life-risk industry and leave it in the hands of the banks and direct (online) insurance.

    I don’t want to imagine what will happen when there are a spate of (disputed) claims down the track as a result of this.

  5. Jeremy Wright January 16, 2013 at 9:42 am #

    The 3 year responsibility period the FSC wants implemented is like trying to apply one bandaid to many cuts. The main reasons why life policies cancel are due to

    1) The hundreds of cheap offers people are bombarded with everyday on the television, radio, online and print advertising.

    2) The substantial premium increases the clients receive every anniversary for their stepped premiums which as our clients keep telling us ‘are way more than inflation’.

    3) The increased cost of living that is hurting peoples purse strings.

    4) Client forgetfullness and lack of interest, in that clients get a premium notice, react by cancelling the policy or ring the,over the phone, cheap and nasty policy spruikers, answer a few quick questions and take out an inferior policy, then cancel their existing policies not realising they have made a huge mistake until they need to claim.

    The retail Life industry is going through a state of reasonable increased new business premium growth and massive outflows and cost blowouts.

    I have said for many years that the way to maintain profits and grow the Life Industry is to make it easy for clients to understand and recognise the differences and benefits of their policies, to make it easy to do Business and to offer solutions that fit our societies addiction to speed and ease of doing business, commonly called ‘McDonalds drive through syndrome’.

    Companies that only offer inferior products understand this model and are happy to quickly set up policies and take your money though god forbid if you actually need to use the product as the quality and service at that end is like opening a door to a void.

    The FSC 3 year responsibility is not going to help the industry, it is guiding all participants, including the retail Life companies, clients, advisers and ultimately all society, towards to void.

    The FSC needs to fully understand our industry and what our clients think, then they,in consultation with us, may be able to come up with a workable solution.

  6. Michael Ord January 19, 2013 at 12:54 pm #

    Lets face it the FSC is out of touch with the adviser community as a whole. Ultimately the 3 year call back period WILL fail. Why? New international competitors are waiting to see it happen. It will be their foot into this market. Many advisers will be ready to support them.

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