The Future of Financial Advice reforms will lift private savings under advice by $144 billion over the next 15 years, cut the price of financial advice in half and double the amount of advice being provided.
Research undertaken by consulting firm Rice Warner on behalf of Industry Super Network (ISN) was upbeat on what it called the transformational impact of the post-July 1 financial advice framework.
“The report finds that within a decade and a half there will be a doubling of financial advice, primarily due to the expected increase in demand for individual pieces of advice,” said ISN chief executive David Whiteley, pictured below.
“The reforms to financial advice will set the industry up for a long period of stability and the research confirms that consumers can have renewed confidence in the system.
“Most significantly, it demonstrates the profound impact on national savings, with $144 billion extra in private savings under advice within a decade and a half.”
The report also includes a cost-benefit analysis of the reforms and finds that the benefits to consumers outweigh implementation costs up to three times over.
The cost benefit analysis finds that over 15 years, the benefits of reform outweigh the costs even on the most conservative assumptions.
“These findings show that the laws are a win-win for both planners and consumers,” Whiteley said.
He added that the financial advice reforms will transform how Australians receive financial advice in two ways.
Firstly, financial advice will be in consumers’ best interests and the price of this advice is transparent and secondly, access to straightforward advice about their super is readily available at an affordable price.
| Key findings from the Rice Warner report include |
| The Future of Financial Advice (FoFA) reforms will boost Australians’ private savings under advice by $144 billion by 2027. |
| The average cost of advice will reduce from $2,046 before the reforms to $1,163 after the reforms by 2026/27 (in 2012 dollars). |
| A doubling in the provision of financial advice to Australians – by 2026 there will be 1.88 million pieces of advice provided compared to 893,000 pieces under a no-reform scenario. |
| The number of financial planners employed will remain stable over the long term, with growth dependent on how quickly the sector adapts to shift in demand for scaled financial advice. |
It does sound like one of those sorts of reports. At first blush it is hard to understand how any of this can add to productivity or living standards. Most clients know what they want and when they want it. Legislative complexity that clients and service providers have to pay to comply with is hardly a natural stimulant to real growth, though it feeds some lawyers and consultants. How any one can make precise statements as to $144 billion in 15 years is beyond me… rather like computer climate model projections 100 years out. I did study econometrics and economic statistics as well as pure mathematics and I constantly observe this wonderful naïve belief – “the fallacy of spurious precision” – when a computer spits out a number – as when people genuflect reverently to Treasury forecasts on the terms of trade or whatever. As for projected cost benefit ratios!
As for industry bodies and industry superannuation funds, perhaps it is the case they sometimes exist to serve their secretariats and salaried officers more than their members, rather like politicians who think they are our masters, not our servants, when they claim credit for spending our money.
Dr Terry Dwyer
Dwyer Lawyers
http://www.dwyerlawyers.com.au
This report is a disgrace and does not belong on a site called Professional Planner. The indication that the number of pieces of advice will rise is an admission that FOFA is a move to transactional advice rather than client focused provision of holistic financial solutions.
The only winner is the industry funds with their hidden agenda. Wake up Financial Planners and get your professional bodies working for you rather than against you.
The report forgot to mention that FOFA will boost union run Industry
Funds control over superannuation by $100’s of billions of dollars
giving the unions far greater control over the economy. Not to mention
the massive amount of money that the unions will make from the
additional funds under management that FOFA and the Fair Work Act
directs towards them. This report from Rice Warner, that was paid for
by the ISN, appears to be more propaganda orientated than evidence
based. I would suggest that its intention is to hide the ISN’s real
agenda. How could anyone credibly state that FOFA will be a win for both
planners and consumers when FOFA only started on the 1st July. The
only obvious outcome of FOFA so far is that it benefits Industry Super
Funds and hurts everyone else.
Could not agree more Tony67 – propaganda for industry super funds and nothing else. The election cannot come soon enough.