Financial planning businesses can create winning strategies by leveraging their systems off the Future of Financial Advice (FoFA) reforms, says Paul Barrett, general manager, advice and distribution at ANZ.
The second tranche of FoFA released last week has painted a clearer picture of compliance requirements for systems and technology, by clarifying regulations around opt in and the banning of commissions.
Barrett says that capital expenditure to meet regulatory change means resources will be diverted to those matters rather than elsewhere.
“While the wealth management providers will be looking to spend their FoFA money on the compliance initiatives, there will always be an eye on: how do we leverage the FoFA changes to create strategies to win in the market?” he says.
“So when we look at our FoFA investment agenda, which we did a couple of weeks ago, we think about the spend in different categories.
“For example, can we put that technology in our insurance products? Do we have to, according to this regulation? No. But can we? Yeah.”
Barrett says the cost of FoFA across ANZ Wealth’s product manufacturing business units will be extensive.
“We’re at a significant sum, in terms of what it’s going to cost us to do just the bare bones changes to our systems to enable FoFA.
“And the reason for that of course is that you’ve got a combination, like everyone has, of modern and not-so-modern systems. “When you build new systems, you try to build them with the future in mind and you build them with technology that’s actually flexible.” The costs of changing systems to satisfy the FoFA requirements cannot be underestimated, says Barrett. “Both insurance systems and superannuation systems are going to need extensive change and potentially our share broking systems as well, and margin lending systems,” he says. “I can tell you that our organisation, and I’m sure we’re not alone here, have project teams internally spending a lot of time to ensure that our systems can cope with all the rule changes. “Essentially, the industry is making a massive change so there’s actually a lot more [costs], in truth, spent on people costs, but that’s a good thing,” Barrett says. “I actually see that as a positive and I think that’s money well spent, and we need to because I do support the notion that the industry needs to be better equipped as professionals to meet the needs of consumers.”
Leave a Comment
You must be logged in to post a comment.