The managing director of Professional Investment Services (PIS) has urged boutique licensees to press the government for compensation to counteract any potential losses they may face in light of industry reforms.
PIS's Graham Evans said the government's Future of Financial Advice (FOFA) reforms had created a number of significant concerns for Australia's financial services industry.
Among the key FOFA issues, Evans said PIS was concerned about the future of boutique licensees that do not have the scale to vertically integrate.
"If I was a boutique I would be pressing the government for some form of compensation like has been done for the dairy and fishing industry," he said.
"It is evident to most that the value of the boutique licensees' business will fall as a result of these changes."
He said other FOFA issues such as opt-in, the banning of commission on insurance products inside super and the uncertainty around resellers' margins on platforms were also concerns for the group.
"The economics of this industry have developed to create a situation in which those who have more subsidise those who have less. Whilst the idealism of a profession is certainly a very worthy goal, we must consider the impacts to the availability, cost and quality of advice," he said.
"This is not a cliff face exercise, it is a journey and as such we need to transition the industry in a way that does not destroy but ensures a level playing field. The last thing we would want is to go back to a quasi-tied agency structure. However, it appears with all the consolidation occurring that's where we will end up."
Despite the concerns regarding FOFA, Evans said PIS, which merged with listed group Centrepoint Alliance last year, remains confident of its strategic direction.
He said PIS's decision in 2006 to separated product and platform from advice has placed the group in good stead.
"We have been travelling down this path for some years now and FOFA in part has confirmed our earlier decision to establish a standalone funds management and platform businesses," he said.
"We already have both private and white label platforms and funds management products with no commissions, trails or rebates to licensees."
