Connect Financial Service Brokers CEO Paul Tynan predicts two key factors that will have the most profound impact on the industry over the coming decade.
The first is the “almost certain” move away from the institutions by financial planners into the self-licensed environment, he told Wealth Professional.
“At the moment, institutions dominate. Something like 85% of financial planners are attached to the big four banks or AMP
. Either we’re going to be dominated, or customers will recognise the importance of independent advice.
“I mean, you know if you walk into a bank the advice you’re going to get will be about the bank’s products. I don’t think customers will be comfortable with that once they really understand, because they want independence.”
Tynan has been fielding more calls from advisers who see the value of independence since the FOFA changes.
The latest version of the FOFA legislation largely halted the sale of financial planning businesses as the interpretations of the new regulations put doubt on the transfer of grandfather revenue.
“People saw that if you want to protect yourself and your business in future, you need to become independent.
“It’s not going to happen overnight. But we don’t want financial services to be dominated by two or three big institutions; we want free enterprise and entrepreneurs focusing on giving good quality advice.
“We wouldn’t like our advice services to get to the stage where it’s stock-standard advice. More competition is always good – people want freedom to choose.”
The second key game changer for the year ahead is the increasing need for financial planners and accountants to work collaboratively, he said.
“For a long time it has been us and them,” said Tynan, who incidentally is an adviser and an accountant.
But legislative changes which make ongoing education mandatory means more work for both professions.
“If you tried to do both, you’ll always be educating yourself and have no time for your clients. There’s more continuous education on both sides of the ledger.”
Tynan noted while urban financial advisers and accountants will not have a problem sharing the workload better by working together, those in isolated country areas – where traditionally they have acted as accountant and adviser – will face increased workloads.