Speaking to InvestorDaily, NAB national manager for financial planner banking Daniel Lowinger said there is currently an “element of conservatism” among financial advice groups when it comes to the grandfathering arrangements contained in the Future of Financial Advice (FOFA) legislation.
Shortly after FOFA became law on 1 July 2013, Association of Financial Advisers (AFA) chief executive Brad Fox publicly warned planners to wait until there was clarity on grandfathering before going ahead with any merger activity. However, law firm Minter Ellison later argued that the existing legislation "can be made to work".
Financial planning sales broker Radar Results announced on Wednesday it had lodged a formal submission to Treasury seeking clarity on the grandfathering provisions.
Mr Lowinger recently spoke to his team of 35 financial planning bankers in order to gauge the extent of the issue.
“We’ve probably had about 15 or so transactions that have been halted for various reasons, and most of the reasons relate to grandfathering issues,” said Mr Lowinger.
A lack of certainty about how a newly acquired client base will fit into a practice has been the main concern among planners, he said.
Mr Lowinger said the back and forth on the issue in the media in recent weeks was contributing to planners’ conservatism on the issue.
“When you see differing opinions out there and the potential ramifications of it, you don’t want to take that risk. They’re just holding off,” he said.
He expressed his hope that assistant treasurer Arthur Sinodinos would address the issue when he speaks at the Association of Financial Advisers conference at the Gold Coast early next week.
“I know it will be a topic on many people’s lips, and he will definitely have to have an answer – or at least a timeframe,” said Mr Lowinger.
But once the issue has been properly addressed by the new minister, Mr Lowinger has no doubts that the market would “be back to normal very soon”.
He pointed to NAB’s Monthly Business Survey for September 2013, released this week, which found that business confidence is at its highest level in three and a half years.
The survey found that conditions in the finance/business/property sector rose more than any other sector in September – up from -3 to 12 points.
Mr Lowinger said that funds under advice and commissions are up “across the board” across NAB’s book of financial planning loans, and fewer practices are missing their payments.
“This puts businesses in a good position to be able to acquire in the future … they’re going to have equity within those businesses to gear it up a bit higher,” he said.
