The Year Ahead – The Issues

The Future of Financial Advice reform proposals look set to dominate the issues agenda for the financial services industry in 2011.  Debate will end and recommendations will become legislation.

We want to know about the issue that concerns you most.  Of all the FoFA reform proposals and other industry issues, which is the one issue for you that will have the greatest impact on your advice practice?  What are you losing sleep over?

We are asking:

Which single issue will have the greatest impact on your advice practice in 2011?

We have offered you a range of issues from which to select, but accept there may be others:

• Banning investment and super commissions
• Transition to fee for service
• Statutory fiduciary duty to client
• Client Opt-in for future advice
• Intra-fund advice
• Prospect of banning risk commissions
• The economy

Banning investment and super commissions

While there remains philosophical opposition to banning commissions on investment and super advice, there appears to be an acceptance within the adviser community of its inevitability and of the need to adapt to new remuneration models for investment and super advice.

Transition to fee for service

While the notion of banning investment and super commissions comes with difficulty for a proportion of the adviser community, is it the banning of commissions or what it will take to transition to charging fees that keeps you awake at night? 

Statutory fiduciary duty to client

For some advisers, the prospect of enshrining fiduciary duty to the client into law has little to no effect on them or their practice because this is the fundamental premise on which their advice practice is based.  But for others, the notion of statutory fiduciary duty represents a potential minefield for future litigation where, despite the best and most genuine intent from the adviser’s point of view, a client may interpret advice and events differently.

Client opt-in for future advice

What will be the impact on your business if each client must consent to annual or regular renewal of your advice services in order for you to continue to receive remuneration from them?

Intra-fund advice

What will be the impact on advice practices if superannuation trustees are given the Government’s blessing to expand the scope of low-cost, simple, intra-fund limited advice they can provide their fund members?  Would this be to the detriment of external financial advisers, or could this be an opportunity to increase business?

Prospect of banning risk commissions

Will the Government take the next step and ban ALL commissions, including risk?  To what extent does this concern you?  Would you be able to adapt?  What proportion of advisers would leave the industry?  Is this the single most important issue to you this year?

The economy

Commentators tell us the GFC is over.  But is it? Look at Europe in the last 12 months: Portugal, Ireland, Greece, Spain and others.  The US economy is showing few signs of sustained recovery and the Australian economy itself seems sluggish, but is still in better shape than most.  Are your clients confident?  Are they concerned?  Will this have a greater impact on your practice than the proposed FoFA reforms?

As we said, we want you to tell us which is the one single issue that is causing you to lose sleep as you picture the year ahead.  Tell us what you think…