Looking through the reading material on the industry yesterday the wording of the RiskInfo poll on the impact of FSLAB caught my attention. Here is the question:
"Will the Government's financial advice legislation reforms improve access to high-quality financial advice?"
It seems simple, but includes two dimensions quality of advice, and access.
I must admit to struggling to answer. In the end I plumped for 'not sure', which might seem like a bit of a cop-out, but I'm genuinely not sure. I do believe that FSLAB will almost certainly improve the quality of advice on offer. It is already, with much more interest being shown by some RFAs in the process of developing effective statements of advice, for example. I also know QFE managers that are more focused on advice as they contemplate taking their QFEs through transition to licence-holder status. I also think it will reduce the numbers of people claiming to offer advice, and that may or may not be a bad thing - depending on how many that number is. If regulation and costs are too tough we could lose lots of good people. If they aren't tough enough the law will have failed too. The challenge for CWG, FMA, and MBIE in their various roles in the change is to come up with the 'Goldilocks' result: just right, and there are many different views about what that is. But I am quite unsure that greater access to advice will result, and in my heart I suspect the answer is a modest reduction in access.
I have a model (which produces a Sankey chart) to enable me to experiment with different scenarios for the future numbers of advisers in different entities, I am yet to land on a 'most likely' case. If you work in distribution, or deal with financial advisers (of any type) I suspect that kind of variability creates a great deal of uncertainty and worry about how to invest for the future.