2013 – with change comes opportunity


2013 is expected to be an interesting year for the financial planning profession with anticipated changes to revenue models, licensing, advice processes and potentially business models.

Among these changes there are likely to be a number of key elements that will impact paraplanners and the advice process in 2013. Here are my top four predictions:

1. FoFA – Changing the way we provide advice
FoFA is not a change to business practice for many advice businesses – instead it represents the introduction of a formal framework to measure that a client’s best interests have been considered first and foremost. From what I see, the challenge to most advice businesses will be to review the way in which advice is being provided and to consider how best to put processes in place to make it more efficient and less costly whilst also ensuring that all compliance and regulatory requirements are satisfied as “proof” of ethical practice.

An expansion of the availability of low-cost, simple advice through FoFA’s proposed Scaled Advice measures is designed to make advice more affordable for clients and may require a business to look for ways to reduce the costs to deliver that advice.

ASIC have provided examples of approved SOA documents for scaled advice scenarios which are 3-5 pages in total length. This potentially has the biggest and in my opinion perhaps the most positive impact on a paraplanner’s role in that whilst the required length of the SOA documents may reduce, the obligation and onerous to properly research, consider and also demonstrate best interests will still remain.

This has the potential to change the paraplanners job role in that the primary focus may shift from plan writing to that of engaging in better researching, modelling and documenting evidence to substantiate advice and clearly qualify the basis for recommendations.

The new opt in measures and the requirement for advisers to give clients an annual statement outlining the fees charged and services provided in the previous 12 months, may result in the need for higher levels of ongoing service and more regular contact with clients in order to demonstrate the value of the services being provided.

Paraplanners are likely to play an important role in the review and redesign of service packages and provision of ongoing support. Businesses will need to focus on developing cost-effective measures to add value and engage with clients on a regular basis. Going forward, social media, phone and skype hook-ups, newsletters, webinars as well as formal meetings and review documents are all likely to have a place in a client’s service offering package.

2. FOFA – Broadening the work options for paraplanners through the introduction of licensing requirements for accountants and other professionals
The removal of the accountants’ exemption for providing SMSF advice from 1 July 2016 (following a 3 year transition period commencing 1 July 2013) could potentially see up to 10,000 accountants required to obtain a limited Australian Financial Services License in order to be able to continue to provide advice on SMSFs. This licence would enable them to provide SMSF advice with much broader scope than they do now.

From a paraplanner’s perspective, the licensing of Accountants may create job opportunities, with paraplanners potentially having the opportunity to work along-side accounting professionals to prepare advice documents. Paraplanners, being the technical / compliance specialists in the practice may also be able to assist accountants with the transition to a new licensing and compliance regime.

This may result in a move away from a “generalist” paraplanner to more specialist paraplanning positions such as SMSF Specialist Paraplanner etc. It could also see the emergence of a new wave of paraplanning professionals with a background in accounting or alternatively, the acquisition of accounting skills by existing paraplanners.

3. Increasing professionalism – through social media and networking
Social media provides a fantastic medium to keep abreast of changing technical and legislative news . As paraplanners embrace professional social media channels such as LinkedIn and Twitter, the level of information available increases and so too the opportunity for paraplanners to engage with and learn from other professionals.

Increasing popularity of the AFA GenXT programs and LinkedIn groups such as Paraplanning Network Australia will also provide Paraplanners with an environment to openly connect, communicate and share knowledge, ideas and skills to assist in their development, collectively enhancing professionalism in the industry and ultimately the end advice and service that clients receive.

4. Tailored Training Solutions – the emergence of training to specifically support paraplanners
An article in Money Management magazine last year intimated that there is currently a shortage of skills in the industry. Put the question to most paraplanners and it’s evident that the industry lacks formal practical training solutions, mentoring relationships and peer-to-peer learning opportunities.

2013 will see the release of specialist training courses and practical delivery methods which focus on the acquisition of ‘real world’ experience for newly graduated job-seekers, new entrants to the paraplanning profession and for those in other support staff roles looking to move to paraplanning.

All in all, it’s shaping up to be a very interesting year for paraplanners and other financial planning professionals. With change comes opportunity and I am excited and interested to see how 2013 will evolve and how the paraplanning industry will adapt.


You must be logged in to post or view comments.