The profession predicts: 2017 – the year ahead

Professional Planner

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January 25, 2017

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If predictions for what 2017 holds could be summarised in a single phrase, it might be a focus on consumers. Experts hand-picked by Professional Planner to provide their views on what’s in store for the year ahead agree it will be a year when the industry makes great strides towards becoming a profession, and that unavoidably means placing the consumer first, second and third on the list of priorities.

It will be the year when the proposed standards body, promulgated under the Corporations Amendment (Professional Standards of Financial Advisers) Act comes into being, and begins the process of setting new education, professional and ethical standards for all financial planners.

Our experts predict it will be a year when growing numbers of financial planners begin to question the value they provide to consumers under their current licensing structures – and moreover, a year when they start to do something about that. It will be a year when individual financial planers stand up and take control of the process of professionalisation.

It will also be a year when the profession takes a meaningful step towards co-regulation when, from July 1, members of the Financial Planning Association (FPA) can choose to be subject to the association’s new opt-in code rather than being subject to the opt-in provisions of the Future of Financial Advice laws.

Against this backdrop of regulatory change, financial planning firms will continue to innovate and use technology to offer better solutions and improved services to clients. And they will do all of this in an environment when the tone for financial markets around the world will be set by the new president of the United States, Donald Trump.

It promises to be a most creative and challenging 12 months. Here, then, are our experts’ predictions for the year ahead.

The association

de_gori_dante_150x300Dante De Gori, chief executive, Financial Planning Association

2017 will be the year of getting on with it – I hope!

From an FPA perspective, we want to see, in 2017, the completion of the legislative process for professional and education standards and the formation of the new standards body.

The next year will bring new debates and scaremongering from some, as we tackle the notion of appointing individuals to the new standards body and developing the exam, the curriculum, the CPD policy, the professional year and the Code of Ethics.

It will not stop there; 2017 will also bring the implantation of the industry funding model for ASIC, a report into whether we are to have a new supersized Financial Ombudsman Service and last resort compensation scheme, and the commencement of the new asset test rules for Centrelink and the controversial superannuation changes.

The FPA will also implement the long-awaited FPA Professional Ongoing Fees Code, which ASIC has approved. Information about the why, how, what and when for members will be explained in a number of information sessions and webinars, as well as at our national roadshow commencing in April.

The non-aligned licensee

taylor_joel_150x300Joel Taylor, managing director, Fortnum Financial Advisers

It’s a customer-driven 2017 in my view. This means unprecedented industry change. What will this look like for the profession? Increased customer scrutiny, coupled with domestic money exiting the local market, heralds the start of significant disruption. Disaggregation away from historical channels is clearly on the cards.

The days of advice being simply about distribution of product are evolving into a broader, holistic view of clients and their financial needs. It’s the rise of the non-bank channels – the IFAs and own AFSLs. International money flows in. Domestic money flows out. Multidisciplinary ownership structures will come under increased scrutiny but not necessarily for the reasons some might think.

It’s not a vertical integration issue so much as a capital allocation issue. The sale of MLC to Nippon and proposed sale of ANZ Wealth give us some clear insight as to what the future looks like, as more of these types of transactions will be colouring the financial planning landscape in the year ahead.

The business owner

wortley_james_supplied_150x300James Wortley, principal, Enlightened Wealth Solutions
Finalist, 2016 FPA Professional Practice of the year

Our client focus in the new year will be on maximising opportunities to apply strategy before the superannuation changes on July 1, and continuing to target new clients whom the age pension changes will affect. We will continue to improve on the client experience to make meetings memorable while differentiating ourselves from our competitors. One of our main business goals is to embrace technology and innovation, with the aim of finding business efficiencies in everything we do.

Now that the government has set the professional, ethical and education standards in the financial advice industry, it’s time for financial advisers (not dealer groups) to step up and take control and lead us in becoming a profession. More businesses will continue to move to a fee-for-service model, without rebates and commission, and advisers will eventually meet the new benchmark education standards. Let’s all embrace the future and then clients will dictate when we become a true profession.

The fund manager

lewthwaite_brett_supplied_150x300Brett Lewthwaite, regional head, Macquarie Investment Management

2017 is shaping up as a year with a wide range of possibilities. Financial markets have embraced the US election result, believing that President Donald Trump will deliver on all his positive, growth-generating policies.

To us, however, it’s too early to tell what kind of US president Trump will make, having been elected on a very anti-establishment campaign and given his many inconsistent statements throughout that campaign.

We believe there are three possible scenarios for the Trump administration:

  • Little progress: As we know, in politics, it’s always easier to say things than to implement them. The structural challenges are difficult to overcome and, as such, the status quo could well remain.
  • Fiscal spending occurs: Fiscal policy is additive to monetary policy, although debt levels continue to rise. While this may support economic growth, it may also have ramifications for currencies and interest rates.
  • Populist policy gets enacted: Protectionist policies that are anti-globalisation ultimately lead to decreasing global trade and growth and, potentially, geo-political instability.

We are wary of a new set of fiscal, rather than monetary, policies and de-globalisation. They are the opposite of what has served financial markets well over the last three decades. We will continue to manage our portfolios with a capital-preservation bias and a strong focus on liquidity, mindful that markets are already exhibiting full valuations in anticipation of stronger growth in 2017.

The independent licensee

heath_paul_supplied_150x300Paul Heath, chief executive, Koda Capital

2017 will be the year when providers of independent advice cross a tipping point and lead the industry towards becoming a true profession. The catalyst will be the advisers who, facing an increasingly stark choice between the illusive comfort of the status quo and the evident change in client demand, will choose the independent model in order to resolve, once and for all, the conflict between client and firm.

In 2017, the traditional domains of wealth advice – taxation and investment – will be besieged by greater uncertainty and volatility, compounded by lower returns. To fulfill clients’ needs, advisers will have to be informed, agile and decisive. They must provide bespoke solutions that are responsive to rapid changes in markets, politics and attitudes.

Cumbersome institutional models founded in scale, distribution and ‘cross sell’ cannot meet what clients now demand. Relationships built on trust are, more than ever, the foundation of good advice. And that trust can survive only in an environment of independence.

Nothing is as powerful as an idea whose time has come. Advisers who truly put clients first will recognise this in 2017.

The adviser

sandercock_tony_supplied_150x300Tony Sandercock, owner and financial adviser, wetalkmoney
2016 FPA CFP Professional of the Year

Here are a couple of questions I would pose: Do clients really care about how you get paid? Do most clients ever question your conflicts of interest? Probably no on both counts. Most people are apathetic about their personal financial world and it generally takes a major stuff up to lose a client. I expect that to change, and probably soon.

As more and more consumers become anxious about their unpreparedness for retirement, or their inability to manage their debt or their love affair with spending rather than saving, they’ll source advice they can trust and they will demand value for money. And in the end, they’ll get what they want. So trying to validate what you do because you charge by either fees or commissions, or because your product is cheaper, or because you don’t work for a bank, is missing the point. The question is – are you worth it?

There’s the challenge for 2017. Walk a mile in your clients’ shoes, scrutinise your offer and validate the value of what you do and how you communicate it.

The institutional licensee

guggenheimer_michael_supplied_150x300Michael Guggenheimer, managing director, AMP Financial Planning

Running a more efficient business is top of mind for many financial advisers. It gives them more time to spend with their current clients and meet potential new customers.

Much of the efficiency gained in the financial advice process in recent years has been due to augmentation of technology to help customers and advisers access information conveniently, and that’s likely to be a continuing theme in 2017. Innovation has helped provide more services online, which helps advisers receive more information about their customers in quicker timeframes.

A broader challenge facing the industry is attracting more people to the profession. There is an opportunity to provide more financial advice to the 80 per cent of Australians who currently don’t seek it, but we need more advisers in the industry to make this happen.

This means 2017 will require continued investment in the growth and development of the industry, as well as more efforts to increase confidence in financial planning, as this will inevitably be the key driver of the sector’s growth.


TOPICS:  asicconsumersFinancial Planning Association



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