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Articles by Neil Younger
Radical transformation needed for golden era of advice
Digging a large hole with a shovel is time-consuming manual labour. More people and more shovels may speed up the process and increase the number of holes but it’s still strenuous work that’s difficult to scale. Real progress requires earthmoving machinery and additional skills. The takeout for the advice profession is that it can’t solve the advice demand and supply imbalance with more shovels.
The Other Favourite
Christopher Hatton rose to great power as a favourite of Elizabeth I. Born in obscurity, why has he returned to it? To continue reading this article you need to purchase a subscription, available from only £5. Start my trial subscription now If you have already purchased access, or are a print & archive subscriber, please ensure you are logged in. Please email digital@historytoday.com if you have any problems.
Balancing stakeholders’ interests – Why it doesn’t work in a profession - Professional Planner
Have you ever wondered why the process of reform is frustratingly slow, tentative and circuitous? It shouldn’t be, you might think, because the need to remove costly and ineffective bureaucracy in financial advice is obvious and urgent, isn’t it? Surely, it’s a “no brainer” that consumers should have the benefit of lower cost advice delivered by well-educated professional financial advisers that make up the profession in 2023. So why doesn’t it happen?
Are you competent enough to run your own licence? Asking for a friend
ASIC cancelled the Australian financial services license of Starfish Financial Services last week, citing “organisational incompetence” as one of the reasons. I know a thing or two about organisational incompetence – I’ve been practicing it for a fair part of my career. Often ASIC’s announcements on bannings, suspensions and fines are a bit ho-hum.
QAR to the side, let’s get on with it
For all of 2022 and the start of 2023, the industry was focused on the Quality of Advice Review. Considerable time and energy has gone into reading consultation papers, attending briefings and preparing submissions. This is not a complaint. The advice review is an important, much-needed look at the effectiveness of the regulatory framework. It promises to significantly reduce complexity in the system, ease the compliance burden on advice businesses and improve advice accessibility and affordability.
Jones lauds local regulatory resilience amid global banking crisis
Australia is unlikely to feel the hit of the overseas banking crisis thanks to holding strong on stricter prudential standards, according to Minister for Financial Services Stephen Jones. Speaking in Melbourne on the last leg of the Quality of Advice Review roadshow hosted by Conexus Financial in partnership with Allianz Retire+, the Minister spoke about the potential impact the collapse of Silicon Valley Bank could have on the Australian market.
Jones avoiding ‘heroic claims’ red tape reduction will improve advice access
While red tape reduction will be a breath of fresh air for the advice profession, there is concern from the Government about whether advisers will pass on cost savings to clients or be willing to take on more clients.
A last resort for consumers, the end of the road for licensees
Financial advisers have a mixed track record when it comes to understanding what “last resort” means. Whether it’s a Buyer Of Last Resort scheme or a Compensation Scheme of Last Resort, there’s always some who’ll see it as first option rather than a final one.
The Holy Grail of professional advice – It’s within our grasp - Professional Planner
Over the last two decades I’ve been deeply involved in designing and delivering financial education programs to tens of thousands of ordinary Australians. Throughout that time, the major recurring topic and feedback from participants of all ages and career stages has been the difficulty they experience in finding affordable and trusted financial advice. Note the two criteria are “affordable” and “trusted”.
Imperative the profession gives its voice during Jones Q&A
The Minister for Financial Services Stephen Jones will hear advisers’ concerns first-hand and tackle questions head-on in a series of Q&A sessions next week. Jones has played his cards close to his chest to date and has not given any clear signals about the government’s intentions in relation to the Quality of Advice Review proposals, except to say he is keen to achieve some quick wins to reduce the administrative and compliance burden on advisers.
From textured pop-punk to Americana that cuts deep: listed below are this week’s important guitar tracks
Welcome to Guitar World’s weekly roundup of the musical highlights from the, erm, world of guitar. Each seven days (or thereabouts), we endeavor to convey you a collection of songs from throughout the guitar universe, all with one factor in frequent: our favourite instrument performs a starring position. Covet – Firebird What’s it? Essentially the most infectious tune but from the Yvette Younger-led instrumental troupe, taken from forthcoming third album, Catharsis.
Levy faces uphill battle to win over consumer groups
Redesigning a regulatory framework for a professional service was always going to generate polarising feedback, but Quality of Advice Review lead Michelle Levy has conceded she has struggled to convince the consumer groups of the merits of her proposals. The government released Levy’s proposals last week which saw positive feedback from the advice profession and auxiliary industries, but a negative reaction from consumer groups.
A new year to usher in a fresh economic era for financial advice
Financial services minister Stephen Jones has spent the summer digesting the Quality of Advice final report. The Michelle Levy-authored report, which is expected to be publicly released imminently, will usher in a new economic era for financial advice. While proposed changes need to be considered through the parliamentary process, if the draft report is an accurate indicator, there are some recommendations that are sensible to progress more quickly.
The 7 key things resilient advice firms are considering for 2023
It’s that time of year where we’re all looking forward to a break, to down tools and ‘shut down and reboot’ for another year. 2023 looks set to be a tremendous year of opportunity in advice, so we’ve gathered the top seven elements that every advice firm should have in their planning for 2023, when they’re back on deck and ready to think about maximizing their success.
Talaria appoints new head of sales
Talaria Asset Management has appointed Lance Oliver to the newly created role of head of sales. Oliver spent over 13 years at Challenger in several business development roles. His experience also includes distribution roles with Perpetual and ownership of an independent private wealth advisory firm. He will lead Talaria’s business development team and help support the growth of its global equity fund.
Overly strong consumer protections have not served Australians
Judging by the latest round of Quality of Advice Review discussions and roundtables on Treasury’s conflicted remuneration proposals, some consumer groups and industry superannuation funds would rather consumers go without access to life insurance advice than for commissions to stay. But consumers, the very people that consumers groups represent and serve, need and deserve good advice.
Online education is a good strategy to retain clients: Practice consultants
Promoting a financial advice business in a market where advisers are becoming a rare commodity is more important than ever, say two practice consultants. Elixir Consulting managing director Sue Viskovic, who has built her career on helping financial advisers improve the way they deliver advice, says advisers need to market themselves more now than ever.
The unknown unknowns
A few years ago, a restaurant not far from home was targeted by the NSW Food Authority, which closed it down for a couple of weeks while it addressed issues around food handling and wildlife in the kitchen. When the restaurant re-opened, many people stayed away. But this makes no sense: after a thorough clean-up and being signed off by the authority, the restaurant surely would be among the cleanest in the city.
Accessibility and affordability shouldn’t undermine protection or professionalism
A reader of the Los Angeles Times recently wrote to the Californian-based newspaper requesting guidance on how to choose a financial adviser. The publication’s response summed up how far financial advice in Australia has come compared to the US. But it also illustrated some of the pitfalls consumers may face if regulation of financial advice in Australia is allowed to backslide.
Quantity trumps quality in the Quality of Advice Review
In Michelle Levy’s future of advice, there are two categories of financial adviser: a professional financial adviser that is licensed and qualified to provide holistic strategic advice and a new class of customer service agent that can also provide limited personal advice. The upper class – referred to as relevant providers – must meet current professional, ethical and education standards, and be paid a fee for service.
ASIC remediation changes puts heavy lifting back on licensees
ASIC gave us an update last week on how our largest financial institutions are tracking on remediating customers for various financial advice-related wrongdoings of recent years. So far, the bill stands at $5.6 billion for around seven million individuals and there’s another $1.6 billion yet to be paid to around 2.7 million customers. For those of you who – like me – can’t quickly do sums in their head, it means remediation will be at least $7.2 billion, for 9.7 million customers.
Merging the profession: A positive opportunity for clarity and renewal
The proposed merger between the Financial Planning Association and the Association of Financial Advisers offers a timely opportunity for those associations to consider and clarify their principal purpose and reasons for existence. This is an important conversation to hold because its conclusion is likely to have a significant impact on the future of the new professional body (should it come to pass) and especially on the likelihood of the industry’s eventual evolution into a true profession.
The business model displacing traditional licensees
There will always be a need for licensees, as long as financial advisers need an Australian financial services licence authorisation to operate. However, to ensure relevance and longevity, the licensee business model must be based on more than a mandated requirement. It must also continuously evolve to keep pace with changing adviser needs and expectations.
FPA, AFA merger can present united voice to Canberra
What a week to rejoin the fray with Professional Planner and Conexus Financial. After four and a half years working with the leading research and consulting business CoreData, and only a few days back into it, we find ourselves contemplating more regulatory change, earnestly debating the definition of the word “good” and staring at a long-overdue merger of two key professional bodies.
Ex-ANZ advice business breaking even; next stop MLC
The ex-ANZ advice business acquired by Insignia in 2017 has achieved breakeven with the goal to achieve the same result with MLC Advice by FY24. Insignia chief executive Renato Mota tells Professional Planner the ANZ advice business was losing around $25 million when it was acquired. “Our aspiration is to have high quality, unsubsidised advice business.
Centrepoint wants scale, just not with Diverger
Diverger still believes there is merit to its proposed acquisition of Centrepoint Alliance with this week’s FY22 results showing their initial offer providers fair value. Both firms released annual reports to the ASX on Wednesday morning and Diverger managing director Nathan Jacobsen tells Professional Planner Centrepoint’s earnings fell below the assumption made based on their acquisition offer in June.
Short memories forget why associations weren't education caretakers
The shadow financial services minister Stuart Robert reckons it would have been better for financial adviser education and professional standards to have been set by the industry itself rather than legislated by government. Well yes, it’s easy to say that now, and Robert admits to the benefit of having 20:20 hindsight.
A little behavioural finance knowledge is a dangerous thing
Musicians Taylor Swift and Ed Sheeran famously sang “I just want to get to know you better” in their song ‘Everything has changed’ but how much, as advisers, are we doing to know our clients better? Life is complex and constantly changing. Every day someone is getting married, divorced, buying a house, having a baby, and burying a loved one. Advisers are across those big moments. They’re also across the finer details like an accident or injury, promotion or home renovation.
Significant revenue boost for WTFG after Synchron acquisition
A third of WT Financial Group’s FY22 revenue is due to it buying Synchron, despite the acquisition happening just before the start of the last quarter. Releasing its unaudited FY22 results to the ASX on Tuesday morning, the parent company of licensee Wealth Today declared revenue of $103 million of which $35 million was contributed by Synchron. Wealth Today chief executive Keith Cullen said “the stage is set” for a strong FY23 with the benefit of a full year post-acquisition.
AZ NGA invests in advice resource firm
Virtual Business Partners’ search for a long-term capital partner has concluded with AZ Next Generation Advisory and financial advisory business Invest Blue co-investing in the Australian-owned, Philippines-based paraplanning and back-office provider.
Affordability and accessibility of advice unlikely to improve: CoreData research
As the clock counts down to the deadline for the government’s Quality of Advice Review, new CoreData research shows there’s a high level of scepticism among financial advisers about whether the review will achieve the aims set out for it. CoreData’s latest quarterly Adviser Pulse Check Survey shows that a significant majority (83%) of advisers are not confident at all or not very confident that the review will improve the quality of advice.
How mature is your business?
Financial services businesses have operated under a stable and prosperous backdrop for decades – Australia has enjoyed three decades of economic growth since “the recession we had to have” in 1991. From 1992 to 2021, Australia’s prosperity was driven by strong population growth, robust exports and a rapidly expanding mining sector. In more recent years, growth has also been buoyed by unprecedented volumes of fiscal and monetary stimulus.
Growth begets patience in race for advice business capital
There is no clearer sign of an industry’s appeal and future outlook than its ability to attract capital and talent. Despite Australia’s complex tax, superannuation and social security system underpinning demand for professional advice, the financial planning industry has struggled to secure the backing of serious long-term investors. This has curbed the formation of large, sophisticated professional advisory businesses.
‘Not going to cut it’: Advisers can’t restrict themselves to under 100 clients
The lack of qualified advisers in the near term means the industry is left with the challenge of lifting the capacity of advisers to handle more clients according to a panel. Speaking at the Professional Planner Licensee Summit in Katoomba earlier this month, Elixir Consulting managing director Sue Viskovic said the lack of new talent in the industry means existing advisers need to service more clients. “I see this as a huge challenge for the advice profession, to lift the capacity of advisers.
Scope with care: In advice, context is crucial
Very soon fintech companies and other commercial operators will have greater latitude to provide sporadic scoped advice, if you believe early predictions about the outcome of Treasury’s Quality of Advice Review. If the questions posed in the Quality of Advice Review Issues Paper are any indication, the government believes scoped advice may hold the key to solving the advice accessibility and affordability dilemma. This has potentially dangerous consequences.
‘Not the right moment’: Individual licensing shouldn’t be priority
A move to individual licensing of advisers would be welcomed by licensee heads who are content with being service-only providers, but the industry has bigger regulatory priorities to tackle according to a panel. While it is currently only a potential change and not something the ALRC has committed to recommending, the removal of Chapter 7 from the Corporations Act could be a prompt for individual licensing.
Advice leads double as trust levels increase
Renewed trust in advice since the Hayne royal commission has led to double the amount of client leads during 2021 compared to the previous year according to research from Vanguard and Adviser Ratings. Vanguard head of financial services Rachel White tells Professional Planner this is despite an overall decrease in the number of advised consumers.
Australians less trusting of advisers than global peers: CFA
Australians are less trusting of financial advisers than their global peers according to a survey by the CFA Institute, with damage from the Hayne royal commission still having a lasting effect on industry perception. Some 56 per cent of global retail investors are trusting of financial advisers while in Australia only 42 per cent are.
Crossbench help not needed: Jones confident ALP will form government
Shadow financial services minister Stephen Jones has not had any discussions about policy alignments with independents running in the federal election as he is confident Labor will be able to form government outright on May 21. Speaking on a webinar hosted by the recently re-named Stockbrokers and Investment Advisers Association, Jones said this is based on his own analysis. “I haven’t [had discussions with independents] and you shouldn’t be worried about that,” Jones said.
Coalition unlikely to make any reforms to vertical integration
Vertical integration has been a notable absence from the Quality of Advice Review and financial services minister Jane Hume has indicated the Government’s position is that it sees no legislative need to eliminate it. In an interview hosted by roboadvice firm Stockspot, Hume noted Commissioner Hayne didn’t ban vertical integration but “it just seemed to happen that way on its own”, implying that the most egregious examples of vertical integration have abated. “Which is a good thing.
Advice crucial to customer relationships for banks: EY
The virtual absence of banks from financial advice has been a uniquely Australian experience, according to consultancy giant EY, with advice critical to the relationship banks have with their customers worldwide. EY Oceania banking and capital markets leader Tim Dring tells Professional Planner Australia has been a “different trend” to other developed markets. “Looking at the US, the Asian or European market, advice and related services are still akin to underlying banking services.
Advice future hinges on less constrictive regulatory regime
The financial services system is broken. It is too tight. The concept of loose and tight systems is typically the domain of science and engineering but it is just as applicable to other fields, professions and industries. The current financial services regulatory regime is the perfect example of a tight system and what can go wrong when extremely prescriptive, rigid controls are in place.
FPA to reduce CFP fees, scrap marketing levy
The Financial Planning Association will reduce total membership fees for Certified Financial Planners by $100 to $995 per year, and introduce a new pricing schedule to accommodate broader industry developments such as the provisional adviser program. Commencing the upcoming financial year, the price drop marks the first change made to the FPA’s fee structure in seven years.
Value, not scale focused: Fitzpatricks takes new M&A lens
Finding value rather than scale is the key to M&A, according to Fitzpatricks Private Wealth chief executive Jodie Blackledge, with the mid-sezed advice group focussing on “complex clients” that get the most value from its ‘Lead Adviser’ system. The most recent firm to join is Brisbane-based Rothgard Financial Partners, which connected with Fitzpatricks via strategic partnership last week. Blackledge tells Professional Planner that higher complexity is often aligned to higher wealth but not always.
Peer-to-peer groups flourish in ‘strange’ advice industry
Financial advice is a “really peculiar profession”, says Clayton Daniel, the founder of advice peer-to-peer network XY Adviser. But it’s the strange nature of financial advice, the countless variables that go into investment, money management and tax strategy as well as the endless character quirks inherent in the clutch of clients an adviser serves, that make peer-to-peer groups so popular in the burgeoning profession.
FPA releases election policy wishlist
The Financial Planning Association has formally called on the next parliament to add a comprehensive tax deduction for the provision of financial advice among other items ahead of the election on 21 May. The association released its 2022 Federal Election Platform which includes its stance on issues including regulatory reform, education requirements, the ASIC funding model, the compensation scheme of last resort, and finfluencers.
6:1 ratio of departing advisers versus new entrants
The ratio of advisers that leave the industry versus replacements is six-to-one, with the sector likely to reach 14,964 planners by the end of the year according to reseacrh group Adviser Ratings. 4,103 advisers ceased in 2021, with only 244 new entrants and 460 returning advisers for a net loss of over 3,000 according the ‘2022 Australian Financial Advice Landscape’ report. “Businesses and government need to work on solutions to promote this industry to new talent,” the report stated.
Dixon Advisory AFSL suspended with ‘most’ clients transferred
Dixon Advisory’s AFSL has been suspended by ASIC with the corporate regulator informed by administrators thatt “most” clients have transitioned to alternate financial services providers of their choice. After announcing it was entering voluntary administration in January, the firm stated its goal is the transfer of orphaned clients with mounting liabilities likely to make it insolvent.
Less educated advisers had poorer client relationships: Research
Higher educated and high-income financial advisers have seen improved client relationships, while lower educated advisers have no change in relationship quality according to research. The report released this week, ‘A Move in the Right Direction: Client Relationships in Financial Advice’, compared advice relationship quality between 2009 to 2016 which covered the industry’s change of perception during FoFA reforms, but before the Hayne Royal Commission.
Too much choice killing efficiency in the advice spectrum
Advice businesses increasingly understand the importance of scale and efficiency, and they’re taking action to get it including consolidating and streamlining systems, adopting new technology and participating in mergers and acquisitions. However, incremental gains in efficiency are often being eroded by choice. Choice is a fundamental component of quality, personal financial advice.
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