Leading accountant-based financial planning network Count Financial Limited (Count) said today it is well positioned with regards to the Future of Financial Advice (FOFA) reforms. Given the professional background of its accountant advisers, Count is a strong advocate of quality financial advice.
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Count also stands ready to implement a business strategy to respond to and capitalise on the reforms, including those relating to volume related payments.
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“Most changes announced today were expected and Count has been preparing for them for at least 12 months,” said Andrew Gale, Count CEO. “As one of the largest accountancy based networks of financial advisers, Count is well positioned to implement a growth strategy to capitalise on the opportunities offered. The reforms are likely to have a consolidation impact on the industry of which Count should be a beneficiary.”
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Mr Gale noted that the reforms ban volume-related payments to licensees from July 1, 2012 but it is understood that grandfathering arrangements apply up to that time.
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“We believe the changes to volume payments are likely to favour larger organisations with robust risk management and sound capital capabilities, such as Count. It is expected that Count’s operating margins will be resilient with these changes,” Mr Gale said.
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“Count already operates a business model which does not conflict financial advice. However, as we have previously foreshadowed, we will likely look to change our business model to align with the new regulatory environment. This includes a range of outcomes in relation to platform offerings and restructuring as required, including “manufacturer” options and multi-manager/fund of fund offerings to help to safeguard against Count’s share of “value chain” being adversely affected,” Mr Gale said. He noted that Count is well advanced in its preparations for this scenario.
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Mr Gale expressed concern that the Government proposed to ban risk insurance commissions in super but permit commissions outside super, a difference which has the potential to distort advice, he said.
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He also said the new two-year opt-in for financial planning arrangements had the potential to increase costs for consumers but said that it represented an improvement on the original one-year timeline.
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Mr Gale welcomed the announcement that scaled (limited) financial advice will be extended industry-wide. “We believe the extension of scaled (limited) advice should make financial planning advice cheaper and more accessible for middle Australia, and will be an important adjunct to the new opt-in arrangements,” he said.
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Count will hold an analyst and media briefing next week to provide greater detail for Count shareholders.
