Industry

The Inside Network’s Jamie Nemtsas sits down with award-winning financial adviser Hugh Robertson to discuss how to build ‘centres of influence’ that can help take an advice business to the next level.

The government now has two internal reports recommending an overhaul of the industry funding model. Yet they appear destined to sit on the shelf “gathering dust”, with the financial services minister of the opinion that recruiting more advisers will fix the problem.

The government addressed perceived ambiguity around advice fee deduction from member accounts by pulling out two statements from the bill that essentially duplicated rules that already exist in the sole purpose test.

Just when the quantum of registered advisers will bottom out is anyone’s guess, but the final tally for FY24 could hardly be encouraging for a government desperate to shore up the numbers.

The large advice provision models are holding up in terms of personnel, but super funds and tax advisers are repositioning their offerings as the cost to serve increases at a faster rate than revenue.

New entrants have “crashed” since 2019, and while less competition affords advisers the luxury of charging more, this doesn’t equate to a healthy or prosperous industry according to the FAAA, which wants to build growth through a program that fosters new talent.

Not all fundies are bringing home a smaller bonus this year, according to Kaizen, with BDMs in the alternatives space doing better than those in the more traditional equities and fixed income asset classes. The big trend, however, is that the most in-demand BDMs are now the ones that can sell to investment consultants as well as advisers.

First it was Scarcity Partners taking a sharp left turn to pick up Evidentia. Then KKR swerved just as hard to avoid Perpetual’s asset management business. And now GDG has pushed all its chips into the centre of the table for the most attractive investment consultancy on the market. Spot the trend?

The frictionless movement of assets is becoming a common feature of markets around the developed world, yet Australia remains a step behind. The ASX is in no mood to rush the move to T+1, however, after its calamitous attempt to implement distributed ledger technology.

It’s a dire situation for consumers but a massive tailwind for financial advisers. More people and more capital in the superannuation coffers than ever, with a stubbornly small number of advisers to service them. 

Costs for the compensation scheme are spiralling out of control, with the FAAA estimating another $4,165 will be added to every adviser’s CSLR bill – bringing the estimated total to $5,709 – if the funding model isn’t re-examined.

Even though most of the Dixons Advisory complaints are yet to be submitted, the CSLR has already allocated a $24 million bill to the industry. Good financial advisers will be forced to pay for the nefarious and neglectful acts of bad ones for years to come.