It has been a long and arduous slog – four years, give or take – to get to where we are today: within days of the start of the Future of Financial Advice (FoFA) regime.
Whether the time, effort and expense will ultimately be worth it depends on who you ask.
“I have to remind people here,” says the head of one major organisation.
“People go, ‘My god, I’m exhausted’. And I go, ‘Keep your eye on the prize. This is going to make a difference’.”
He says it is issues that people disagree with and want changed or thrown out that inevitably absorb the greatest amounts of time and effort.
“There will always be elements that people will disagree with; there are elements that we would prefer to see done differently,” he says. “But that’s the nature of major reforms.”
Peter Kell, commissioner and recently appointed deputy chairman of the Australian Securities and Investments Commission (ASIC), says the overwhelming benefit for financial planners from FoFA will be “greater professionalism”.
“The FoFA reforms will make a significant contribution to that objective, which is an objective we all support,” he says.
“A key element of the reforms is to better align the interests of advisers and clients, and that alignment of interests is fundamental to any profession.”
Phil Anderson, chief operating officer for the Association of Financial Advisers, says the FoFA regime “will in some ways force them, in other ways encourage them, but what will be the outcome will be a better quality of relationship with clients”.
“That will be beneficial for both the clients and advisers,” Anderson says.
“We’ve done some research recently that suggests that the more frequently you’re in contact with your clients, the more profitable it is for the adviser. So I think that’s a win-win.”
And Mark Rantall, chief executive of the Financial Planning Association of Australia (FPA) says the “bigger picture impact of that change is firstly, consumers are empowered to have control over the transaction”.
“By that, I mean that they have ultimate control over whether or not they continue to receive advice or they don’t; and if they choose not to continue to receive advice then they can terminate that relationship,” he says.
However, Astrid Raetze, a partner at Baker and McKenzie, is not convinced about the overall merit of the reforms, reporting that she and her colleagues are struggling to see how the FoFA reforms have any benefits for financial planners.
“What we’re seeing, in fact, is advisers giving less advice – everyone is trying to move to execution only [if they possibly can],” she says.
“If they can’t do execution only, they’re doing scaled or limited advice – and I’ve seen one or two of those, and to be honest that limited advice wasn’t worth the paper it was written on. It was staggeringly inadequate.”
