Strong focus on the government’s Future of Financial Advice (FOFA) reforms is hindering the evolution of Australia’s financial services industry and leading to missed opportunities, according to industry executives.
IOOF general manager of distribution Renato Mota said the reforms have become a distraction and urged advisers and investors to take a much broader view of the industry.
“I would agree that FOFA is by far the biggest single distraction to our industry evolving and really looking to develop better outcomes for investors and advisers,” Mota told InvestorDaily.
“But whether we like it or not, we still have 15 months evolution to execute on. I wish it was as simple as saying ‘lets just ignore it all and focus on other things’.”
He explained that the industry has no choice but to ensure it executes FOFA as effectively as possible.
“But there is no question that [FOFA execution] is coming at the cost of other development in the areas such as retirement, income, social media, promoting advice or member engagement,” Mota said.
The Association of Financial Advisers chief executive Richard Klipin said focusing on FOFA over other rapidly emerging influences affecting financial planning businesses is a risky strategy, particularly amid current economic conditions.
“The political and regulatory focus is still front and centre. Engaging with ASIC, understanding their timetable and so on is critical for advisers,” Klipin said.
But he said that during the past three years, while the industry has become appropriately focused on engaging in the FOFA process, participants have missed opportunities to broaden the value of advice.
“Yes we need to broaden our horizons [but] we need to keep a very clear eye on the political and regulatory process,” Klipin said.
“I don’t think this is an either/or environment. It’s a case of, you must to both.”
Patron Financial Advice financial adviser David Hasib said that many businesses should already have dealt with most of what FOFA is trying to achieve and so need to focus on their main priorities.
“Without doubt, if you’re worried about FOFA then you are absolutely taking your eye off the ball. Clients will be the ones who ultimately suffer because they aren’t getting the attention they deserve,” Hasib said.
“[FOFA] has to happen, but spending too much time on that, one becomes myopic and you lose focus on the most important thing which is the client.”
Robbie Bennetts Enterprises (RBE) founder Robbie Bennetts said the financial services industry has been “consumed” by FOFA for the past three years.
“The financial services industry has been consumed for the last few years with a backward-looking series of enquiries and reviews that were only ever going to result in more regulation and more complication,” he said.
“While the industry has been distracted, direct sales of financial products and the use of social media for business purposes have come from nowhere to now be as big, if not bigger, factors than FOFA for the future of financial advisory practices.”
