Will 2013 be the end of the road for independent advisers?

What’s ahead in 2013?

Have you checked out Alan Kohler’s www.saveoursuper.com.au?

This gives a good indication of what’s ahead in 2013 and beyond.

Kohler is editor-in-chief of Business Spectator, in which he recently wrote “Australia’s super system is a national disgrace”, citing market risk, longevity risk, little regulation around where monies are invested, and fees. The article ends with an advert for readers to register and join his ‘cause’ – Save Our Super – and take back control of their superannuation.

The viewpoint Kohler expresses in that article is particularly interesting in light of how well he has done out of Australia’s superannuation system. Thanks largely to that system he denigrates, he accumulated some 15,500 subscribers to his successful market analysis newsletter – The Eureka Report – which he sold earlier this year to News Limited for $30 million in cash.  

That’s a pretty good return from a ‘national disgrace’.

Kohler’s moves are indicative of the new emerging player in the Australian superannuation marketplace. The Eureka Report sale also shows how much News Limited values Kohler’s significant influence and leadership at a time when Australian Mum and Dad investors don’t know who to turn to for financial guidance.

Kohler is in the right place at the right time. Like Paul Clitheroe a decade before him, he is filling a financial advice leadership void that for most Australians has widened in 2012. And he’s done it by rubbishing most of the current participants, which in itself doesn’t do much to endear Australians to the would-be profession of financial planning.

As 2012 draws to a close, there are peculiar and growing noises sounding the death knell for ‘independent’ advisers. I’m always a tad suspicious of learned and well-intentioned committees trying to make the simple complex, such as those calling for guidelines on what ‘independent’ means.  But I’m even more suspicious when those committees are manned by people who used to make their money from the provision of financial products masquerading as financial advice.

Many pundits are still confusing the emerging financial advice profession due to their present biases and former business models. The future advice profession will not resemble the real estate industry, or the motor vehicle industry, or the travel industry, or the pharmaceutical industry or the telecommunications industry. The barriers to entry for distributors in these industries were low, as were the barriers to entry in the insurance or brokering or leasing or financial planning industries.

The foundations of these industries are properties, vehicles, tickets, phones, drugs and financial products.

The foundations of the future financial advice profession are more akin to those of the medical profession, with higher entry requirements and with value provided through upfront and ongoing services.  The future financial advice profession will still have strong links to products (as medicos are strongly linked to drugs), but those links will be at an arms length (i.e. practitioners won’t own the drug company).

2013 isn’t the end of the road for independent advisers, but it will present all of us with more challenges and more opportunities.  Indeed, our opportunity as an advice profession stems from the uncertainties ahead.

But just like the CD makers and vinyl record producers were totally unprepared for Apple’s “10,000 songs in your pocket”, most financial planners are nowhere near ready for a proposition that offers “financial certainty for life”.

The impending struggle we face as financial advisers will be what defines us. If it were as easy as it used to be – remember 2004 through 2008? – then anyone at all could give advice (as indeed they did during that period, with lots of bad expectation setting and client management).

Now, no one group in Australia ‘owns’ the trusted financial advice brand.

It’s the best of times to be building great advice firms.

What do you think?

Image courtesy of Sira Anamwong / FreeDigitalPhotos.net


About Jim Stackpool

For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.

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