Complacency is still a major factor for some advice practices when it comes to implementing strategies around the government’s Future of Financial Advice (FOFA) reforms, according to an industry consultant.
“There’s certainly been a reluctance to start because it’s so hard and it’s also not necessarily knowing where to start,” Seaview Consulting director Rob Neill told InvestorDaily.
“[In terms of] adopting the changes, doing work around business models or altering the structure or nature of their client bases, we’re finding a lot of them are well and truly underprepared.”
In addition, practices were also using the lack of FOFA detail as an inhibitor to changes and development necessary for the future, Neill said.
“There often needs to be a catalyst to drive change,” he said.
“When you strip it back and look at what businesses need to do to be successful in FOFA, they need to run an effective business, have a clear value proposition, be profitable … but when you roll all of these things into one, they’re nothing more than sound business fundamentals.
“If they keep doing this same [action], they’re going to get the same result, so if the result they want is different to that, then they need to change some fundamentals.”
Practices were also overwhelmed at the amount of change required, as most were established and developed in a different industry environment.
Therefore, there was a significant variance in the stages practices were at in regards to being successful in a post-FOFA environment, Neill said.
“There’s this big gap [where] the better businesses see FOFA as an evolutionary change and then some practices that haven’t started the journey are going to find it extremely hard to catch up and will be non-competitive going forward,” he said.
“We’ll see a polarisation of quality occurring as the better businesses get better.”
What differentiated a quality and successful practice from those that were not came down to having a very clear vision for staff and using every resource it had access to as effectively as possible, he said.
“Where it tends to fall away a bit is where you have businesses that have a really good adviser and technician, but they’re spending half the time dealing with administration, management, systems and those sorts of things,” he said.
