The majority of advisers believe they will lose clients as a result of the proposed Future of Financial Advice (FoFA) reforms, according to Radar Results.
The financial planner consulting firm conducted a survey of advisers to gain feedback on the FoFA reforms, which are expected to be implemented in July 2012.
57% of those surveyed believed it was “very likely” that they would lose clients if the “opt-in” reform was implemented. A further 20% thought it was “somewhat likely”. Only 6.7% thought it was very unlikely.
… the loss may not be related to the fact clients have to pay for a service each year, but due to the additional administrative burden
Comments from respondents about this issue indicated that the loss may not be related to the fact clients have to pay for a service each year, but due to the additional administrative burden.
“I will have to accept reduced revenue in the future and charge higher fees upfront. I will have less scope to employ more staff and will be more selective with clients (ie. some clients that I service today, will no longer be viable)”, said one respondent.
Another participant said that additional business resources would be required… “… shifting our available time that would normally be spent servicing our clients to having to having to spend more time managing the business.”
In addition, 14.2% of respondents said that they were likely to retire from business earlier than originally planned, as a result of the proposed reforms.
One survey participant commented: “I have found the whole thing so stressful that I am in two minds whether to stay in the industry or bite the bullet and try to make my business work for me in the new environment.”
When asked whether they had moved to a fee for service model already, 24.6% of respondents said they had not. 25.6% said that they had transitioned less than half their clients, while 21.7% were operating a full fee for service business.
Interestingly, 68.4% of respondents believed that commission based businesses were worth less in the current environment.
Click here to view the survey results.
