What do we do? (When red tape interferes with good advice)

By December 3, 2020Financial Planning

There is nothing like being stuck in front of the computer at home for a few months to focus you on the meaning of life, the meaning of work, what’s in the fridge? etc etc.

In our case it has led to some discussion around FB Wealth Management’s role in our clients’ lives, particularly assisting younger clients.

The firm’s motto has been, almost from inception, “to build and protect wealth”. While mottos can sometimes be seen as convenient spin, in our case it typifies so many of our relationships.

Many of our long-term clients will recall our journey together. The initial contact, at a younger age, may have been a simple meeting in which you asked questions in relation to a few issues, such as superannuation rules, pension advice, insurance queries or savings and budgeting. That single meeting may have solved the concern at that time and a short follow-up letter, or a copy of our file note would confirm our recommendation.

In a lot of cases we may not have had further contact for a number of years. However, at a later date, as our clients’ financial positions improved, they returned for a more formal ongoing relationship. As you are all well aware, taking the step to expose your full financial affairs to an outsider is a stressful decision and requires you to place a great deal of faith in the adviser. If you had previous dealings, albeit on a simpler issue, that element of familiarity and trust that helped to make the big decision easier.

From our point of view, as advisers it is similarly less stressful. Growing with a client means our way of doing things is “road-tested” over many years. The same goes for those who have started with us as insurance clients.  As income grows and wealth starts accumulating, they often transitioned to our full service offering.

Sadly, it is our belief that excessive and inefficient compliance has made it increasingly difficult to engage clients in these “one off” matters. It is incredibly frustrating, and we have attempted on many occasions to engage with our politicians to explain. Unfortunately, there seems little appetite to change the status quo. So it has become “all or nothing” for new clients.

We are not alone in this thinking. Most of our colleagues in the industry have reacted with a similar response. They have been forced to deal with a greatly reduced number of clients on a more intensive and ongoing basis, to ensure that the multitude of regulators and bureaucrats are satisfied that we are doing our job.

As a result, there is now likely to be an entire younger generation of well-educated, motivated investors who will simply not have access to financial advice. In addition, they will likely be substantially under insured as there will be very few insurance advisers remaining in the industry. (This has potentially huge impacts for retirees who may end up financially supporting grandchildren.)

We continue to lobby our local member to demonstrate how over regulation is simply making advice unaffordable for younger Australians. Ironically over-regulation has achieved the opposite outcome to what the Government was intending with their reforms post Royal Commission.