FoFA and the fault lines shaping advice

Tria was recently asked to participate in a roundtable discussion with a leading group of industry thinkers to discuss the “real future of financial advice”. Along with Tria’s Mark Watmore were representatives from aligned advice groups, independent advice groups, the FPA, and technology providers.

As big an impact as FoFA is having, particularly on independent advice, it’s not seen as one of the decisive trends which will determine the success of failure of the financial advice industry.

Yes FoFA heaps additional misery on an already challenged industry. But to put it into context, it’s a bit like being hit with severe indigestion – when already suffering from appendicitis. It’s the underlying condition which is the real problem.

So what are the underlying conditions which need to be addressed?

– Rise of the financially informed consumer – a mismatch between what should be a rapidly growing advice market (remember how 2010 on were supposed to be glory days for advice as the boomers retired?) and widespread negative views of advice;

– The shift towards SMSFs and direct investments, partly related to the above;

– Continuing cost pressures across the value chain, of which only a minority relate to FoFA reforms of remuneration;

– A barbelled advice industry, with institutionally aligned groups at one end and boutiques at the other – FoFA has had its biggest impact here clearing out the big independent groups, but in fact the growth of the independents had been well below the aligned and boutique channels for some time.

– Transformational technology which addresses consumer needs rather than just advisers. We’ve said for some time that it’s increasingly hard to see consumers who have grown up with internet banking and online broking simply handing over all their affairs to an adviser in what is essentially a one-way relationship.

A detailed summary of the discussion is captured in a white paper “Beyond FOFA – five fault lines shaping the ‘real’ future of financial advice” that can be accessed on our Media page: http://www.triapartners.com/media.php?article=content/Media&type=NTc=.

There is also some short video content showing comments and views from each of the participants which can be viewed at http://www.decimal.com.au/.