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.”