The latest industry research has revealed the financial planning community believes the implementation of the Future of Financial Services (FOFA) reforms will result in more costly advisory services for consumers.
The study conducted by Core Data estimated the new bi-annual opt-in requirement contained in the FOFA reforms would add approximately $84,500 a year to the cost of providing advice for every financial planner.
This stemmed from an estimated 6.5 hours of additional administration per week that would result from the change in legislation.
The calculation translated into a total additional cost per year of $1.35 billion for giving advice, an expense the research house said "would most likely be borne by the consumer".
In support of its claim the researcher found that only 15.6 per cent of advisers surveyed thought clients would be better off when the reforms are implemented.
Furthermore the study showed financial planners believe the banning of commissions on risk cover held within superannuation funds would also add to the price of advice for consumers.
In particular they indicated the price of advice would rise because clients would now have to be charged directly for risk advice services in a superannuation context. Moreover participants said the increased costs would make risk advice unaffordable for many individuals.
In keeping with this sentiment only 10.1 per cent of respondents thought this move would lead to better quality advice while only 7.8 per cent thought clients would be better off when this recommendation is implemented.
Apart from clients, financial planners said they would feel the pain of the reforms too, with 86.5 per cent of those surveyed saying the two year opt-in requirement will impact their business and 46.2 per cent admitting this impact was expected to be significant.
The survey garnered the opinion of 358 advisers and was conducted online between 29 April and 4 May this year.
