It has been reported in an MLC Life-commissioned white paper that 67% of advisers reported a decline in profit since the commission reforms begun. It has been stated that advisers need to cut expenses by 20% - 25% to remain financially viable when upfront commission is reduced to 60% in 2020. Alternatively, advisers could start charging a fee for advice. Click here to read more. Of course, the problem is that at the same time as income is falling, costs are rising. These are not just cash costs, but the additional time required to meet compliance requirements. I have met with two AFAs in New Zealand who, over the past five years, have found the time required for each client's compliance requirements is squeezing margins and reducing the time available for marketing and client service.
There are solutions, but most require additional investment. New administrative systems are not so much costly, as most online tools are now very cheap, but time consuming to configure. You can avoid configuration costs by opting for standard systems, provided by someone else, but in that case you lose differentiation.
A conversation that begins as one about automation, usually ends up being about what you consider to be good advice - because we usually need to define advice process before we try to optimise delivery.