Self-licensed financial advisers remain optimistic about the future of the industry despite the upheavals and disruptions of the past few years and the many challenges lurking on the horizon, according to a national network of self-licensed financial advice practices.
According to My Dealer Services Pty Ltd's (MDS) recent survey of self-licensees, self-licensed financial advisers predict that the most significant challenges ahead for the industry are:
In addition, advisers expressed concerns about staff costs and increases in professional indemnity (PI) insurance premiums (some as high as 50%) where additional expenditure could negatively impact business profitability.
“Fifty-eight percent of the advice practices surveyed confirmed they were more profitable than two years ago despite the impost of compliance-related costs impacting the finances of their businesses,” said MDS director Alex Euvrard. “The rising cost of compliance is unsustainable in the long run and needs to be addressed as an industry priority.”
The survey respondents also claimed that the growth in consumer demand for professional advice is another industry issue that will deteriorate further as more advisers leave the sector before the deadline for academic qualification approaches.
Although considered as a disadvantage, MDS stated that the exodus of advisers has an advantage, with 42% of advisers confirming that they were considering acquiring books of business to facilitate growth. The report revealed that 26% of the respondents said they were unsure if they would pursue acquisition opportunities, but Euvrard predicts that many in this group would do so.
Moreover, the respondents claimed that having an interpersonal relationship with their clients mattered the most, followed by a strategy to reach goals and investments and investment returns.
Meanwhile, an overwhelming 98% of the respondents claimed that technology would play a more crucial role in the future, with benefits measured in reduced costs and improved operational efficiency.
“Most importantly, it will significantly enhance the client experience and provision of advice,” Euvrard added.
The respondents also predict that the most significant threats in the future are geopolitical risk, inflation, and inflated valuations of the stock market.
“However, of the challenges ahead, the most crucial is the impact of compliance and regulators need to heed the calls of advice professionals for a more workable and practical framework going forward,” Euvrard said.
