Financial advice groups are not prepared to deal with the consequences of clients choosing not to opt-in and renew the services of their advisers, an advice executive said.
"If you look at the industry dialogue, it's all opt-in but actually, what people need to be talking about is opt-out," BTFG advice general manager Mark Spiers told InvestorDaily.
"It's not to say that opt-in isn't important, it's absolutely critical, but what about opt-out? How do you build for that and how does that come to play?"
The opt-in provision, under the government's Future of Financial Advice (FOFA) regime requires advisers to request their retail clients to opt-in or renew their advice agreements every two years, where clients are paying ongoing fees.
How advisory groups will manage clients opting out was not on the minds of advisers, Spiers said, as the industry has been too immersed with opt-in and had not looked at the bigger picture of possible outcomes.
"People should also be thinking about opt-out," he said.
"What process do planners have in place for clients to opt-out and sit in some other low touch, lower support model to still be able to communicate with them, on the basis that down the track they will want to opt back in due to an event in their life or strategy?"
FPA chief executive Mark Rantall said the issue comes back to database management, as advice groups must ensure procedures are in place to actively manage its databases to avoid the loss of clients.
"Most financial planning software solutions have quite sophisticated database management so there should be no issue with managing [clients who opt out] in the appropriate way," Rantall said.
"This creates an opportunity for financial planners to really focus on their value proposition and to continually engage with clients to demonstrate the value provided so that clients don't look to opt-out or inadvertently not opt-in."
Discussions around opt-in have now settled amongst the industry, Rantall said.
"The solutions are still being worked on actively, whether that be through code approval or a platform or software systemisation of how to manage opt-in so it's a work in progress," he said.
"Most people are turning their heads to signing up to an approved code to obviate the need for opt-in and also how to manage the opt-in requirements in a software or system sense."
