Risk-focused boutique dealer group Guardian Advice says it is on track with expansion plans but warned that licensees are facing increasing difficulties with comprehensive Future of Financial Advice-readiness programs.
Guardian Advice head, Simon Harris, said the long-term sustainability of Australia’s financial services dealer groups rests on the robustness of their FoFA-readiness program, but that confidence is being eroded by “policy on the fly”.
With the start date for FoFA only four months away, Guardian advisers are in the process of being transitioned to a fee-for-service model by July 1.
Guardian believes the regulatory change has given insurance advisers a slight advantage over investment and super advisers because there has been less meddling in their remuneration models. In turn, this has caused a proliferation in risk dealer groups, as risk revenues remain more sustainable.
However, Harris is not entirely happy
“I am disappointed that the government is considering changing grandfathering rules, as this would hurt advisers and their clients by adding complexity and cost to the advice process. This would be a bad outcome for the industry and another example of policy on the fly,” he said.
“Equally disappointing is that the government is considering more changes to superannuation. Since 2009, we’ve already had 10 significant changes to super.”
While self-regulation of the insurance industry seems to have been confined to the sidelines as FoFA takes centre stage, Harris believes sustainability issues will need to be addressed in the future.
“A more sustainable industry structure requires improved business processes and automation, simplified products, greater end-customer connection and a remuneration structure that better aligns the interests of the adviser, customer, dealer group and manufacturer,” he said.
“Guardian is working hard with all of its preferred insurance partners on alternative remuneration structures to ensure more sustainable outcomes for all stakeholders.”
Harris added that Guardian Advice is making solid progress on its medium-term strategy to grow its adviser network to more than 200 players by 2014.
The Suncorp-owned dealer group has an interim target of 160 advisers by July 1 this year, a milestone that Harris believes they will beat by 20 per cent.
“Advisers are increasingly seeking an entrepreneurial culture of like-minded people,” he said. “With licensees experiencing increased pressures associated with regulatory change and tighter economic conditions, Guardian is an attractive partner.”
