'Dinosaur' advisers need to keep up

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The wave of regulatory change FoFA has introduced has had many effects – one of which is to divide practicing financial planning firms, whether large or small, into two groups, says one industry expert.

One group is happy to adapt to improve processes and the other thinks “this is all too hard” and digs their heels into the ground, says business analyst Max Francitto.

“There is an animal once upon a time who said, ‘there’s no way I’m going to change’. And his name was Dino the dinosaur. Now you have to go to a museum to see Dino,” he deadpans.

Francitto concedes there are costs and extra work in implementing the new regime, plus modifications needed, such as to competition-reducing grandfathering rules.

“But at the end of the day we need these changes. The industry needs to be seen to be more transparent, more progressional and more client-focussed.

"The fiduciary duty to the client is becoming paramount because you are dealing with a very personable and personal element of the relationship and that’s giving people money advice.

“And to a lot of people it’s all the money they’ve got. You’re not advising multi-millionaires who if they lose a few thousand it doesn’t make a difference. You’re in an industry where your advice is critical to people – they are highly dependent on it.”

Francitto advises those “dinosaurs” that are rejecting FoFA to adapt fast.

“You can modify and change but you can’t just sit there and absolutely reject it. It will be like a tidal wave, it will sweep over you.

“It’s just how you manage it that makes it bearable or unbearable.”

Meanwhile, recruitment agency Randstad’s financial specialist Joanna Taylor says FoFA has also created change for financial services jobs, but in a good way.

While FoFA has caused initial grappling difficulties for advisers, it could ultimately create a new job market.

“Through productivity and efficiency gains, FoFA has created an enhanced focus on technical skills across both para-planning and support roles," Taylor says.

"There is increased conversation and speculation in the market that the next growth area will be the return of the servicing adviser, which allows a dedicated focus on new business.

“The general consensus is there is still much work to be done and a positive attitude towards this prevails.”

  • MaxF on 13/11/2013 9:03:27 AM

    MrAlleycat, have you ever written a trauma policy for Asteron/Sun Alliance Life? That is the policy wording I helped write back in 1990/91 and I have the #1 policy number to prove it. That is all I am going to say on this subject, my expert opinion has obviously upset you and few others but then again most experts do that. By the way, if you are going to criticise people at least use your own name..as I did or should I have written the article as Alleydog !!?? LOL

  • alleycat on 12/11/2013 5:07:52 PM

    Dear Max,
    So you you developed the very Trauma policy advisers promote today.

    The funny thing though Max is that Trauma/Crisis insurance was started in South Africa, created by Drs Christian and Marius Barnard and was first promoted through Liberty Life.
    It was then first introduced in Australia by a little known life company called Greater Pacific Life (GPL) which later became ANZ Funds Management.
    It was subsequently marketed shortly after by the now defunct Occidental Life.
    You see Max I was agency manager NSW for GPL and I don't remember you being part of any of this.
    The fact of the matter is that even with my life insurance background, I went back to University to get my Dip FP and I've been a CFP for over 10 years.
    It's a bit rich given your background to call anyone a dinosaur or suggest someone who promotes life risk and has had further higher education shouldn't also call themselves a financial planner.
    I refer you to my previous post for clarity !

  • MaxF on 12/11/2013 2:24:43 PM

    James, you are so wrong I am no longer practising because in 1984 I moved into management and managed advisors through the 80's and 90's and then as a consultant still work with them to date.....can you all please focus on the fact and not on my CV as that would be unfair to you.....

  • Warren on 12/11/2013 12:48:36 PM

    We had no choice Max if we were to continue in Business and look after existing clients - you would know that if you were in the Industry for as long as I have.
    None of us avoided change ,we had to adapt but this stuff is something China would be proud of

  • James Smith on 12/11/2013 12:35:46 PM

    Thanks for clarifying Max F.
    When you say that fiduciary duty to client is BECOMING apparent are you confessing that when you were an adviser you did not put your clients best interest above your own ? Does that explain why you are no longer practising ? Acting in the best interest of clients is a state of mind not a new marketing strategy -clients smell it a mile away - we don't need regulators telling us - our practises success depends on it.

  • Anthony Kane on 12/11/2013 12:21:05 PM

    Well Max I'm glad that you've had that experience, but just because I drove a car around race track once along time ago, it doesnt make me a race car driver.

    No one here is against change. You can't be in this industry if you are. Most just see FOFA and its results as pointless as it will not fix the problems that exist. It will not help clients on any level, and it certainly wont help advice businesses. Successive Govts havent exactly bathed themselves in glory with previous FP legislation have they? FSRA gave us 30+ page SOA's for basic investment advice where only 4 pages get read. Not all big legislative changes are helpful

    Labeling advisers dinosaurs because they disagree with the pile that is FOFA is childish. I expected better from a man as educated and experienced as yourself.

    Lastly, thinking that we all want to be called Financial Planners is a big assumption.

    Rant over

  • Max F on 12/11/2013 11:15:31 AM

    I absolutely love it when people attack commentators without researching their background......for the record I have sold life risk , I have created the very trauma policy some advisors write today and unfortunately I have had first hand experience at a trauma claim...........all that aside ..... if change is not what its all about why is it that we no longer have Life advisors and Insurance Agents....we all want to be known as financial planners....that is change in the making....

  • Innocent Observer on 12/11/2013 10:42:11 AM

    You are under our control. ASIC is your master. Bow down pathetic subjects.

  • James Smith on 12/11/2013 10:38:37 AM

    It is clear that the big retail and industry super funds business strategy is based on direct marketing and to bend the rules to facilitate this strategy. They also want to imply that advisers do not deliver on advice and service in order to direct more clients deal direct with them.This is despite the fact that these same institutions have no track record in providing quality advice or service. How is this in the consumers best interest ? In the pursuit of their vested interests these institutions have made it pretty clear that they have no qualms about treading over the advice profession as collateral damage.We therefore need to ensure whatever regulation survives does not enable these big institutions to bypass accountability re advice and service and to use marketing strategies to make false promises. This is as much a consumer protection argument as it is a defence of the advice profession. Both are under threat so we cannot afford to be complacent. We can start by calling a spade a spade and not be fooled into the group think that implies more regulation is required to promote our profession.

  • Neil on 12/11/2013 10:29:24 AM

    Seriously - who writes this stuff. A fair slice of FoFA is simply bad legislation the design of which had a purpose tangential to client protection. How does this make some planners dinosaurs?

  • Anthony Kane on 12/11/2013 10:16:13 AM

    What business analysts, PR hacks, broken lawyers and the rest of the professional commentators fail to understand is that the FOFA Regs and the ability for the public to receive effective and appropriate advice are mutually exclusive.

    FOFA will not help marginal or low/no profit clients get the advice that they need.

    FOFA is not a business model. It will not allow advisers to sustain their businesses to look after the clients that need it most.

    From its genesis in the Storm debacle, FOFA was hijacked and turned into a method of destroying perfectly able advisers and their businesses. The result was to to be the slow drive of cared for clients to careless union funds. For anyone to try an align FOFA with consumer care shows that you either dont understand the advice business or they dont care.

    I'm in the business of looking after my clients by making sure that they have a legacy to pass to their family. I make sure that when they have lost all that they love, they dont lose all that they have.

    What do you do

  • Alan on 11/11/2013 7:23:47 PM

    Agree with most of the above comments. I might be getting a bit cynical in my mature years but in my opinion the whole industry is stuffed. There has been NO education and no propagation of the good work that we do so now it is all mass marketing on line nonsense. Who needs advice now, just go and DIY swith the money hungry direct marketers who don't even need t o give advice or provide an SoA. No level playing field and ASIC are creating a shameful fear and intimidation campaign. It's just all downhill with the over regulation and the sooner I can join the mass exodus of advisers, the better.

  • alleycat on 11/11/2013 4:45:20 PM

    Dear Mr Francitto,
    The very core of the problems associated with financial planning were never going to be solved by FOFA.

    As others have said in this post, over-regulation by an inept,corrupt, dishonest Socialist government aided by vested interests from Industry Funds/aka the Trade Union movement to punish all for the sins of a few seems sadly misguided.

    If you think being owned by a Bank a Fund Manager, an Insurance Company or an Industry Fund isn't a serious conflict of interest then how do you think "client best interests" will be served under FOFA?

    Your comments at best,... are delusional

  • Alistair on 11/11/2013 12:33:46 PM

    Is it not interesting that the very people who label advisers as dinosaurs amongst other names just because the FP is critical of the process and nonsense that FOFA has bought us to are the very folk who are not practitioners, have little understanding of the the stress that has been caused to the adviser and consumer respectively and have their own desire to voice an opinion to highlight their worth to the industry.
    Lets get facts right. FOFA is a disaster. With all of its nonsense, it is in fact driving the industry backwards where the big 4 banks and the odd life office of old like AMP along with the major industry funds will dominate. Just as Labor wanted. The consumer will be sold product under the loose veil of best interest when what is clearly apparent is what is in the best interest of the institutions above.
    Meanwhile ASIC - you know - the "regulator" is utterly hopeless in their ability to rein in the shoddy practices of all of these institutions where despite their mass, despite their processes and the morons in charge of same, the EU's keep being handed out and a slap on the wrist is all they will get.
    Meanwhile the responsibility for advice is on us even though we as FP's are following the systems of these institutions and as for the consumer, they are just forgotten by the regulator and these entities.
    Advisers lined to these banks and life offices are essentially treated as casualties as they are the ones that will be out on their ear while the companies that lead them their will continue on.
    FOFA is a failure. Many processes have been added, our businesses are compromised, our ability to deliver advice compromised, our clients therefore are compromised and bombarded with more paperwork than they need. Why?
    Apparently so that we can have a so called business analyst (what a joke) and others like him with their own agenda, tell us that some of us are dinosaurs and that we need to get with the times.
    Well Max - go back to your qualification and rip this up - as a business analyst - understand that our businesses are hurting. They are because of the nonsense of FOFA. Stop waving your own damn flag to justify your existence and listen to us as advisers before you start the name calling as you are just displaying ignorance and not acting in the best interest of our industry. Get your facts right or just go away as you are largely of no value if you fail as a business analyst to do the one thing that advisers do and do this well. Listen.

  • Warren on 11/11/2013 12:29:34 PM

    WP how do we get this stuff to a politician who can stop this destruction of a viable advice industry.The comments from people actually doing the job and doing it well are the only things that makes sense.
    I bet the writer of the above article has never sat at a kitchen table to persuade a family to look after their future.
    One person or one Institution robs people and thousands of independent advisers and dealers pay the price.
    Yes Peter a "collection of socialists" and it only took a few years for them to stuff up our good work world wide not just Canberra.

  • PETER CORRIE on 11/11/2013 11:51:41 AM

    Dino the Dinosaur didn't have time to change a large meteorite slammed into the earth and he was eliminated.
    What FOFA and ASIC are doing is helping the elimination process with declining adviser numbers due to over regulation which includes severe penalties for non compliance. As a consequence of these changes and so called reforms less service and advice is provided by advisers on lowered incomes to clients or prospective clients.
    The changes associated with FOFA were compiled by the socialists in Canberra in the last 6 years who thought in terms of the collective , this is the way it should be for all, and by rejecting recommendations from industry groups on all the main issues including the rights and choices of individual advisers which were also pushed aside.
    We have become the victims of an ideology rather than pursuing and following changes for the betterment of the industry, adviser or consumer

  • Joanna Taylor on 11/11/2013 10:15:06 AM

    Traditionally advisers in the past have been both hunters and farmers. Some businesses have already moved to a model where these functions have been segregated and post FOFA, with the increased focus on service, we expect to see more incidence of this.

  • GAB on 11/11/2013 9:52:09 AM

    I don't really understand this part..."There is increased conversation and speculation in the market that the next growth area will be the return of the servicing adviser, which allows a dedicated focus on new business".

    Do you mean having an adviser who purely seeks out new business to then flick off to the servicing adviser?

  • James Smith on 11/11/2013 9:42:29 AM

    The labelling of advisers that are critical of FOFA as dinosaurs highlights the mess we are in. FOFA has not been well thought out, creates unnecessary red tape and promotes an unlevel playing field in the advice space that is not in the best interests of customers. Whether adviser businesses are customer centric and offer a compelling value proposition is a separate issue. The later has always been determined by clients - the view that FOFA is some enlightened breakthrough to help clients assess value is simply not true.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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