A levelling off in share market returns, combined with the Government’s proposed changes for adviser remuneration appear to have dented confidence in the financial planning industry, according to latest data released by Wealth Insights.
With current sentiment trending down over recent months, the five year outlook is also trending lower. Wealth Insights says the Government’s proposed financial services reforms have clearly dented planners’ five year outlook.
In a gloomy set of data, one third of advisers expect that the proposed reforms will have a negative effect on their businesses.
… half of all advisers anticipate a decrease in revenue if the proposed … reforms take effect in July 2012.
The researcher says older advisers and those who have been in the industry for more than ten years are more likely to anticipate business to be worse off,
as do advisers who have smaller-value clients, while just over half of all advisers anticipate a decrease in revenue if the proposed Future of Financial Advice reforms take effect as planned in July 2012.
While most advisers believe the enshrinement of Fiduciary Duty into law will have no impact on their revenue, they do have concerns about the impact of the proposed annual opt-in arrangements. With the prospect of opt-in annual renewal of fees:
- 38% of advisers expect their revenue to decrease slightly
- 12% expect revenue to decrease ‘a lot’
Further data suggests those advisers who currently apply a fee for service model are more comfortable with the proposed opt-in arrangement:
Fee for service advisers expect 17% of their clients will not opt-in each year, while this number increases to 29% for advisers currently charging renewal commissions.
