Networth News

Welcome to the Networth News update for Monday the 12th of September.

AFA calls for delay in FoFA implementation

The Association of Financial Advisers (AFA) has called on the government to delay the implementation of its Future of Financial Advice (FoFA) reforms. Money Management reports that as the government had delayed the delivery of its first tranche of FoFA legislation, it should push the implementation date of 1 July 2013 back as well. The AFA also said FoFA will undermine the independent financial planning sector and lead to greater consolidation, and that FoFA would only benefit industry funds and large players in the financial advice sector.

Opt-in costs eased for non-independents

The cost of compliance with the government's proposed changes around opt-in will be eased for financial advisers if they are members of a network or aligned with a major wealth manager, according to Rice Warner. The Financial Review reports that if financial planning practices are members of dealer groups or act as sales representatives for banks or major wealth product groups they will be able to draw on their services to alleviate costs associated with opt-in. Around 80 per cent of financial advisers are authorised representatives of networks or major wealth managers, according to Rice Warner research.

Banks actively hiring financial planners

Australia's major banks are actively recruiting financial planners despite recent share market volatility, according to financial services recruiters. Investor Daily reports that banks are hiring advisers so they can cross-sell products to customers with a mortgage or who have a deposit with the bank. Derwent Executive managing director Ben Derwent said banks wanted to develop a captive community of clients to that are offered a suite of financial products. Rather than hiring externally, Derwent some banks are redeploying and retraining existing staff to sell financial planning products.

Putting the right price on financial advice

Establishing a suitable pricing model for clients is a key concern for boutique financial advisers. Money Management reports that issues such as justifying an hourly rate, assessing the costs of providing advice, justifying an asset-based fee, placing a value on advice and separating price from product are key concerns for boutique financial advisers. A recent conference for such advisers heard that more than half of delegates indicated asset-based fees a part of their overall pricing structure at present, and clients are happy with this model due to the alignment of interest. However, placing a value on initial advice and how to charge for this while working on business development was a contentious issue.