Financial planning

The Wallis committee looked at meeting the financial planning needs of future generations that would include an aging and technologically advanced population.
The report recommended reorganising the regulatory environment to promote;

• confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and
• fairness, honesty and professionalism by those who provide financial services; and
• fair, orderly and transparent markets for financial products;

As a result APRA (Australian Prudential Regulation Authority) was established on 1 July 1998 and regulates the financial sector. APRA’s purpose is to;

Balance the objectives of financial safety and efficiency, competition, contestability and competitive neutrality and, in balancing these objectives, promote financial system stability in Australia.

ASIC is another consequence of the Wallis report and was established on the same day as APRA. Its role is to administer the Corporations Act 2001 which regulates financial services. ASIC is the financial services watchdog.

• a prospective ban on conflicted remuneration structures;
• a fiduciary duty for financial advisers to act in the best interests of their clients; and
• an adviser charging regime with options for consumers when paying for advice.

to improve the trust and confidence of Australian retail investors in the financial services sector and ensure the availability, accessibility and affordability of high quality financial advice

FOFA became mandatory on 1 July 2013 and was voluntary from 1 July 2012. The legislation amended the Corporations Act 2001 and introduced:

• A prospective ban on conflicted remuneration structures including commissions and volume based payments.
• A duty for financial advisers to act in the best interests of their clients, subject to a ‘reasonable steps’ qualification.
• An opt-in obligation that requires advice providers to renew their clients’ agreement to ongoing fees every two years for new arrangements.
• An annual fee disclosure statement requirement for post 1 July 2013 clients.
• Enhanced powers for ASIC.

Digital disruption is already here

• In 2012-2013, 64% of Australians banked over the internet
• In 2014-2015, 86% of Australians had internet access
• In 2014-2015, 61% of Australians purchased goods over the internet
• In 2014-2015, 44% of Australians used the internet for home-based work

There has also been a proliferation of online product comparison services like;

• comparethemarket
• iselect
• shopbot
• ProductReview
• youcompare
• comparison
• canstar
• infochoice
• mozo
• finder
• ratecity
• Youi

People looking for financial advice are finding a growing number of DIY and Robo advice sites like Stockspot.

As tools become more powerful and user-friendly a lot of ‘simple’ or scaled advice can be done online by the user themselves. Other users may need just a little advice and others will need (or prefer) full advice after a face-to-face meeting with a qualified adviser.
According to the Rippoll report 80% of Australians do not have a financial adviser. This could improve as advisers attract online clients.