Planner’s advice to industry: get comfortable with change

Like many financial planners, Robert Reid finds the shifting goal posts of regulatory changes tiresome.

But he argues they’re fundamental to lifting the reputation of the industry and atoning for the scandals of the past. Those scandals that may have been caused by a few unscrupulous and unethical advisers but, as he notes, the stain has a way of spreading to affect the reputation of the entire fraternity of planners.

“It’s easy to bitch and moan about regulation, and it remains an ever-present concern, but we have to remember as an industry that we have brought this on ourselves,” he says. “It’s because of our own behaviour and if we want to move towards self-regulation of the kind they have in other industries, such as accounting, then we have to earn the public’s trust.”

While this means a degree of flux and uncertainty as regulatory frameworks change and laws introduced, it also means the industry is flushed of any lingering snake oil salesmen.

“It’s a shifting landscape, but the upside is as the regulations get tighter the people who are in it just to make a quick buck will get out and will leave it to the rest of us, who want to turn the industry into a profession,” Reid says.

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Advice group principles provide security

Advice groups should be proactive in devising professional and ethical commitments for their advisers that go beyond the Corporations Act as the industry was ultimately heading toward further regulation to shore up consumer protection, according to Fortnum Financial Advisers.

In a new white paper, “Building a Professional Advice Framework”, Fortnum group chief executive Neil Younger and managing director Joel Taylor said that despite a raft of new regulations being introduced to financial planning in recent years, there were still problem areas that were likely to lead to further legislative action.

These included a lack of restrictions around dealer group ownership, subsidisation of adviser licence fees by institutions and the narrow range of products permitted to be on aligned advisers’ approved product lists.

“They all point to an under-regulated industry with major shortcomings when it comes to consumer protection,” the report said.

“Therefore, it’s dangerous for advisers to rely on the Corps Act for guidance on how to meet their best interest duty obligations – they need to have a set of professional principles to guide them.”

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Eschew products, support client-led advice: whitepaper

A whitepaper has stated that the future of advice firms is an existence as genuine professional services firms, but added that licensees also need to adapt in order to support them.

The paper was jointly authored by Neil Younger, managing director and group chief executive of Fortnum Financial Group, and Joel Taylor, managing director of Fortnum Financial Advisers. It states that advice needs to be rebuilt on three pillars: a set of strong professional principles, sound professional judgement, and robust professional practices.

Taylor says Fortnum’s professional principles underpin what it calls its professional advice framework, which is designed to help advisers view their services “through a ‘professional’ lens as opposed to a legislative lens”. The principles cover fair engagement, competence, professional diagnosis, and best interest advice.

Younger says advice models are “transitioning from essentially licensee businesses that ran distribution business models, to advice services businesses that have a very different framework of solutions for advisers”.

“There is a vacancy in the middle-market segment for an established, professional advice services business with sufficient scale to be able to develop technology solutions that deliver efficiency into the delivery of advice,” he says.
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Building a Professional Advice Framework

Newly appointed Managing Director & Group CEO of Fortnum Financial Group, Neil Younger has worked alongside Managing Director of Fortnum Financial Advisers, Joel Taylor to realign the dealer group’s focus.

This whitepaper addresses Fortnum’s Professional Advice Framework.

“At Fortnum, we have established the reputation to call ourselves a Professional Advice Services Business; with a deep commitment to continually striving to find a better way”, and we look forward to continuing this journey in the future.

Building-a-Professional-Advice-Framework-Whitepaper MARCH 2017

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Fortnum continues to dominate the Licensee of the Year Award due to its focus on helping advice businesses succeed.

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