A Professional Planner online poll has revealed the depth of unrest in the financial planning industry, with over half of respondents indicating major changes to their business in the near future.
The poll, which asked if practice owners expected to “sell your practice, join a new licensee or apply for your own AFSL within the next 18 months”, received a 55 per cent ‘yes’ vote, with only 45 per cent of respondents indicating they would maintain their business’s status quo in the period.
The results come at a critical juncture for the financial planning industry and reflect the anxiety advisers feel about the impact of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which exposed widespread issues around fee misuse, adviser misconduct, conflicted remuneration and errant breach reporting.
Commissioner Kenneth Hayne released his interim report into the inquiry’s findings last Friday, which including the flawed nature of many vertically integrated product arrangements, lingering evidence of conflicted remuneration and fees for no service, inappropriate advice and numerous cases of improper conduct.
A large portion of the anticipated adviser movement – particularly the number of advisers expecting to sell their practice – can be attributed to incoming education standards, which the Financial Adviser Standards and Ethics Authority is due to release in the coming weeks.
The new regulations, which will force existing advisers to comply with new continuing professional development rules by 2019, pass an exam by 2021, sign up to a mandatory code of ethics by 2020 and have a related degree or equivalent by 2024, have polarised the advice community and prompted a glut of advisers to consider leaving. UBS analyst Kieren Chidgey told Professional Planner in July that “at least a quarter of the roughly 25,000 individuals who call themselves financial advisers will probably call it quits and leave the industry within the next five years”, partly because the average existing practitioner will need to undertake “642 hours” of study to meet the new standards.
Through all this, advisers will look to their licensees for help. The royal commission’s findings foreshadow great change in the advice industry and businesses will need guidance on how to navigate this change and chart the best course through the education standards.
If they aren’t getting value from their licensee, the poll results indicate, remaining advisers are quite prepared to make a switch or go it alone.