Australia's financial advice industry has unintentionally created a cost gap as sectors of the market transition their businesses from a commission-based model to a fee-for-service offering, an advice chief has said.
ANZ advice and distribution general manager Paul Barrett said research conducted by ANZ, coupled with industry research, found it cost around $3500 to service a client in holistic financial planning, yet clients were only prepared to pay $300 on average for advice.
"One of the things I don't think we've done particularly well as an industry is understand the cost to serve. So moving to fee-for-service you somehow have to address how you bridge that gap. So it's not a simple equation," Barrett said.
"Our view is that advisers need to do more to prepare themselves to be ready for a FOFA (Future of Financial Advice) fiduciary, opt-in world. To that end, we are taking our responsibilities very seriously."
As part of ANZ's responsibilities, the business has launched a new program, FutureReady, to support its financial advice network in transitioning to a post-FOFA world.
The program had three key components: real-time updates, technical papers and online step-by-step practical toolkits to help businesses transition to a fee-for-service model, and workshops, Barrett said.
"At the end of the day, most financial planning practices are small businesses and small businesses don't have the resources readily available to them to navigate such a substantial change. It's one thing to say you've got to move to fee-for-service, it's another thing to actually do it," he said.
ANZ Wealth is in the process of working on additional tools to add to FutureReady for when the government's guidelines around other FOFA reforms, such as opt-in, are known.
