The Australian financial planning industry is well ahead of its UK and US counterparts on a number of fronts, according to Advice Centre Consulting principal David Fox.
The US regime is currently lagging behind the Australian model with firms not adapting as quickly to deliver multiple components of financial advice to clients, Fox told InvestorDaily.
“In the US there certainly is still a focus on investment management in advisory firms and it is not a trend like we are seeing here to broaden that scope of advice,” he said.
“One principal from a very good US advice firm was a bit horrified when I suggested that there was a trend here to bring in different specialists working in tax, finance broking, mortgage broking, insurance and risk so they had all those capabilities in the one firm.”
Meanwhile, the UK planning industry’s greatest challenge was the transition away from commission-based advice, Fox said.
“A majority of the industry is still very much transaction-focused and commissions are their way of life,” he said.
“But the regulator is all of a sudden saying that’s not going to be the case, so they haven’t yet had the chance to evolve to that stage of making that decision for themselves like a lot of businesses in Australia have.”
As a result, Fox said UK advisers are currently struggling to get their mind around moving to a fee-based model and deciding how much they should charge clients.
“They are really challenged to understand what value they are delivering to clients,” he said.
“So the experience that they are going through at the moment is very similar to what the Australian industry was going through eight to 10 years ago. Typical advice businesses in Australia are well ahead of typical businesses in the UK.”
