New education, professional and ethical standards are a short-term challenge for all financial advisers, but head of the TAL-owned licensee Affinia, Marcus O’Sullivan, says once they’ve been negotiated the financial planning industry will be entering a new era.
“We’ve got a very bullish attitude, not just as a licensee but from our practices as well,” O’Sullivan says.
“They see the opportunity. Whilst appreciating there’s going to be extra work and extra time to get these things done, everyone is looking through the next few years as once we get through this we are going to be in a golden age in the advice industry.”
O’Sullivan says few industries are afforded an opportunity for reinvention quite like the one financial planning has been given. He says it is a chance to “kickstart the industry and move forward with very little legacy trail”.
Celebrate the opportunity
“Any opportunity where we can get better as a profession, we should see that and celebrate that,” he says.
“We shouldn’t be running and hiding. Education standards is going to be a challenge, no doubt, but it’s only going to be a challenge for the advisers who actively choose not to participate in it, because they’re seeing it as a good end date for retirement or they’re redesigning their businesses so they sit in more of an MD or CEO role and they don’t actively give advice any more.
“Or, if you you’re one of the participants who says, ‘OK, I’ve got to get onboard and I’ve got to do my education and training’, then that’s an opportunity to learn something, hone some skills. I don’t suggest for a second it’s not challenging, but it is equally an opportunity as well.”
O’Sullivan takes a similar view of the potential outcomes of the Royal Commission, which is due to produce an interim report next month and its final report next February.
“What’s going to come of the royal commission is what’s going to come of it; that’s not the issue,” he says.
“The issue is, as an industry and as a business, how do we deal in an agile way to make sure we meet the new requirements? The thing for most people in the industry is it would just be nice to know now what the rules of the game are. Let’s get to a final position on education – whatever that may be, let’s get to a position. Whatever the outcomes of the royal commission are, they’re the outcomes. Let’s get to them and then let’s build our businesses accordingly.”
O’Sullivan says Affinia is focused on the short-term issues of helping its advisers and their businesses through the transition to new standards but isn’t losing sight of the longer-term challenges and opportunities that will underpin advisers’ success well beyond that.
The long and the short of it: helping advisers transition into a ‘golden era’
Affinia’s short-term goals:
• Map all existing advisers against the new education standards:
– Make sure they have access to relevant educational institutions
– Provide clear instructions on courses and education pathways
– Support advisers through the process of upgrading qualifications
• Prepare advisers for the industry-wide exam, which must be passed by the end of 2020
• Support businesses to improve efficiency and productivity
Affinia’s long-term goals
• Continue to build out internal monitoring and supervision frameworks to ensure effectiveness and reliability.
• Further develop the Affinia Advice Handbook– a step by step guide to giving advice in a post-FoFA world underpinned by the licensee’s business rules, procedures and professional standards requirements.
• Actively seek opportunities for practices to be more productive and engage better with consumers via new technology, products, services and advice strategies.
“We still have to be active in the advice we give, we’ve got to stay sharp in our skills, and all of those types of things,” he says.
“We’ve got to make sure we help our advisers navigate the industry exam, education standards, those type of things. In the very short-term that’s what we’re focused on.
“But the longer-term play to bring us out to the other side of 2024 is definitely helping our businesses corporatise, automate, invest in technology and produce a much better, smoother customer experience.”
Affinia’s embrace of the new standards reflects the fact its advisers are relatively young. The average age of advisers in its five largest advice businesses – those with 10 advisers or more – is about 35.
Advice in the ‘new world’
And while that means the businesses in the network tend also to be at a relatively early stage of development, he says they are “more likely to grab hold of newer technologies, gains and efficiencies, and look to give advice in what the ‘new world’ is”.
Affinia has about 120 advisers in its advice network, and its growth will depend on having the internal resources to continue to properly support its advisers.
“In licensee businesses today you can only grow to the extent your internal resources allow that,” he says.
“Gone are the days of super-licensees, fast-growing licensees with massive amounts of advisers and only a handful of staff. You’ve got to make sure you’re resourced to the exact ratio of how many advisers you’ve got, particularly around professional standards and those sorts of things. If you’ve got two compliance people and 400 advisers it’s going to be a very difficult ratio to justify.”
O’Sullivan says he sympathises with advisers facing the prospect of additional study to upgrade their qualifications, having himself recently completed a bridging course at university.
“I haven’t been to university in a long time, and you do forget how much work there is,” he says.
“I do sympathise. But at the end of the day I’m a participant in this industry as well and I don’t particularly like reading the headlines every morning where people have been caught doing the wrong thing and the reputation of the industry as a whole is being tarred by the actions of the view.
“So I sympathise, but I’m very much in the proactive camp. We’re going to be given some new rules to play by; let’s get the rules now; let’s learn them; and then let’s start playing.”