Kaizen Recruitment Hosts Annual Wealth Management Leaders’ Round Table Discussion

Kaizen Recruitment recently hosted the annual luncheon for leaders in wealth management. The meeting drew together representatives from a range of wealth management and superannuation firms, with the aim of providing a networking forum for senior professionals, and an opportunity to examine current environmental challenges.

Kaizen Recruitment sincerely thanks Andrew George from Elixir Consulting for chairing our event and thanks senior wealth management professionals from Mercer, CBUS Super, HESTA, Wilsons Advisory, Dixon Advisory, Challenger and Freedom Finance for their participation and candour.

With the outcomes of the royal commission into misconduct in the banking, superannuation and financial services still making most of the recent newspaper headlines, a few hot topics were discussed, and several themes emerged.

Profitability in Financial Advice

The perfect storm is brewing in financial planning with revenue reducing and costs rising. The government has set a 1 January 2021 end date for all grandfathered commissions, insurance commissions are reducing and compliance costs are rising, along with support staff salaries and licensee fees all rising. Under FASEA, advisers also need to sit an exam and meet new education requirements. All these factors have resulted in the estimated average cost to provide ongoing financial advice to clients rising to $3,500, therefore, for financial planning firms to become (more) profitable, they need to either:

• Work out the cost to serve and reprice their service offering to ensure every client is profitable;
• Reduce the cost of delivering financial advice by operational efficiency and/or offshoring; and/or
• Only provide ongoing advice to high-net worth clients who can afford to pay more than $3,500 per annum for ongoing service.

Sole Purpose Test

Under the sole purpose test, financial advisers can only charge financial advice fees from a client/member’s superannuation account if the advice is for the retirement benefits of their client. The responsibility to meet the sole purpose test is currently with the financial adviser, however, ASIC are currently reviewing this and have communicated they may hold the superannuation trustee responsible to ensure the fees deducted relate to financial advice provided for retirement benefits. Should ASIC implement the changes, superannuation trustees will need to review and ‘sign-off’ the financial advice provided to the members before releasing the fees to the financial adviser.

The Future of Licensees

Licensees will continue to evolve and adapt to the current environment to ensure they are profitable as stand-alone businesses. Licensees may even evolve into a bespoke add-on service provider and deliver services dependent on the licensor’s needs, i.e. compliance, outsourced paraplanning and CPD. It is also unlikely banks will own and operate licensees in the future with some banks have already existing this space for instance, Securitor under Westpac Bank and Financial Wisdom under Commonwealth Bank.

Financial Advisers leaving the industry, technology and insurance reforms were also touched on during the round table discussion.
*This post does not necessarily reflect the views of any individual present.

For all your financial planning recruitment needs, please contact the team at Kaizen Recruitment on  03 9095 7157 or info@kaizenrecruitment.com.au.

Kaizen Recruitment specialises financial services recruitment across funds management, wealth management, superannuation, investment consulting and insurance. We are based in Melbourne and Sydney. For assistance or further information please telephone our office at +61 3 9095 7157 or submit an online form.

Like what you see?

Please feel welcome to join
Kaizen Recruitment’s mailing list

SUBSCRIBE