The direction of change usually gets debated, but in fact, it isn't direct that's the issue - its pace. Most of the changes currently occurring have been predicted for some time. Consider a list:
- Increased disclosure requirements - commission in dollar terms
- Disclosure of soft commissions
- FMA investigations into insurance replacement business
- Increased competence requirements
- New draft Code to apply to RFAs
In fact, when the current Financial Advisers Act was but a Bill, many people thought that these would apply to RFAs, and were surprised when they found that they did not. Immediately post-GFC the FMA found itself with quite a lot of more urgent work to do, and has only really returned to these questions recently. Meanwhile some of us have been saying for years that the AFA Code should be considered the guide for RFAs - and quite a few RFAs have followed it, too.
he point of this post isn't to debate those issues in particular. It is to illustrate that there is debate about direction, and debate about pace. Some people felt that the prediction about direction of change back then was wrong. In fact, the direction of change was correct, and in line with a whole host of wider forces: consumerism, technological change, and regulatory trends around the world. What was wrong was the pace of change.
Pace matters for short-term decisions, but direction is the key for strategic ones.
Say you are an adviser with a short time horizon for planning - perhaps because you are contemplating retirement - and you are considering the competence requirements. When, exactly, the requirements apply may be critical to the decision to undertake them, or retire. Not so for the adviser with a longer term time horizon - for them professional development must be part of the strategy, with time and funding included in their thinking.
Similar differences in approach could be applied to issues like the range of advice services offered, whether to start charging fees, what process work to do, whether to invest more in systems, and so on.