Baby Boomer financial advisers looking to leave the sector may be forced out under unfavourable terms unless they make timely decisions about their immediate future, an industry business consultant has claimed.
Connect Financial Service Brokers Chief Executive, Paul Tynan said some older financial advisers were failing to understand that as time moved on they were less well-placed to exit under their own terms and could be forced out as a result of external forces.
“Baby Boomer planners are faced with regulatory and educational changes which are only going to increase as technology continues to disrupt traditional business models,” Tynan said.
“Education standards, industry and professional accreditation exams and requirements are here to stay and if a course of action is not taken whilst time is on their side, these planners will find the exit strategy being made for them”, he added.
“Education standards, industry and professional accreditation exams and requirements are here to stay…”
Tynan said these changes were altering the way new advisers were entering the profession and mature age advisers could not wait for a return to pre-GFC times and values.
“New era business models and an increase in education debt is going to make newly qualified financial planners very selective when choosing their first employment role”, said Paul Tynan.
“Many newly qualified planners and will choose a salaried position with an institution over a more entrepreneurial consultant role in order to pay down their debt. Acquisition of an existing practice and associated financial commitment is definitely not on the cards,” he added.
As a result of this shift, Tynan said older advisers need to consider how they can make decisions on their own terms but warned that the time to do so was short.
“The best decisions are always made on the individual’s terms and not by letting government, associations or licensee dictate the choice as there are greater forces that will affect the financial services industry in play. These will impact everyone’s future employment and career journey,” he said.
Fully agree the number of advisers will reduce primarily due to the new education requirements coming into play. Leave on your own terms, do not wait as it will only become more difficult.
With more than 35 years in a fantastic industry and assisting many families made the decision to exit. A member of both financial associations FPA & AFA, one for over 40 years and the other since inception conclude that both really do not provide any benefit to their members.
As a successful business person you have to plan and I am amazed how many planner business owners think all the new changes won’t affect them. Do they think they will be grandfathered or receive special treatment – dreaming.
This industry is in for massive change, Fintech, Robo advice to mention a few, still people will need assistance but at what price will they pay – hourly rate?
Our industry like a lot of others is evolving and as has been the case globally and with change comes reduced employment due to advanced technology, look at the industries Australia has lost. Asic has gone overboard with regulation but they are there to protect the community (although sometimes after the event) they have a job to do and should be applauded for lifting standards which can only be a benefit to society.
As there are less advisers costs will also need to rise to cover business expenses, how will all the dealer groups survive with fewer existing and new advisers. Why would a graduate enter this industry other than as a salaried employee?
I may be wrong and only time will tell but advisers of the future will be on an hourly rate similar to other professions such as solicitors and accountants, people will be reluctant to pay service fees as a percentage of assets as is charged by many advisers today.
For those who only do insurance your days are numbered due to the reduction in commission rates. Are you going to spend travel time, meeting time, SOA time dealer fee splits, membership fees etc to write a $1,500 premium @ 60% commission (gross) hence the reason the insurers have their own direct insurance divisions they know there will be fewer advisers.
Banks haven’t got out of Financial Planning/Insurance because of regulation, they love making money it’s because they cannot see a good return for the money invested going forward.
It’s a great industry should you decide to stay adapt with the changes, be prepared to study which will take time and a lot of money and in the end you will still be providing a valuable service.
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