Financial planning practices that continued to maintain a wait-and-see stance regarding the details of the government’s Future of Financial Advice (FOFA) reforms were jeopardising the future profits of their business, a Business Health partner said yesterday.
“We’re encouraging them not to waste this window of opportunity – there are some things that they can be doing to get their business ready, regardless of what can happen in the future,” Business Health partner and director Rod Bertino told InvestorDaily.
“The better guys are at least thinking about it, starting to form a view and starting to put processes, systems and changes in place to make sure whenever the date and whatever it may look like, within reason they’ve done as much of the preliminary work as possible so that they’ve prepared as well as they could.”
Bertino advised against waiting until the last minute, despite the lack of clarity.
“It’s quite possible that what we end up with may look different and there may be an election in the interim, but are you willing to risk the future profits of your business on one or all of those things happening?” he said.
“There are some things they can be doing now based on what we do know that would hold them in good stead.”
Practices Bertino had spoken with did not want to embark on significant changes without knowing the explicit details of FOFA, but there were dangers in running out of time for implementation.
They should at least start to conduct an audit of the back office to prepare for the annual fee disclosure requirement, he said.
“If you have to produce this statement, whatever it may look like and with what we know at the moment, could you do it? If not, what changes would you need to put in place to your IT systems, client management systems and reporting systems?” he said.
In addition, less than three in 10 Australian planning practices formally surveyed their clients, he said.
“The window of opportunity is that we have time to find out [how clients are feeling] now and if it’s not in keeping with the client’s expectation, make some changes before we legally have to embark on this path,” he said.
“I wouldn’t like to have an opt-in or annual disclosure discussion with my client without knowing as much as possible as to how they’re feeling.”
