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ISN research highlights FOFA benefits
New research commissioned by the Industry Super Network (ISN) found Future of Financial Advice (FOFA) would result in a $144 million boost in Australians' savings under advice by 2027.
The study, undertaken by Rice Warner, also highlighted the average cost of financial advice would almost halve — from $2064 before the reforms to $1163 after the reforms by 2027, while the provision of financial planning services would double.
"The report finds that within a decade and a half there will be a doubling of financial advice, primarily due to the expected increase in demand for individual pieces of advice," said ISN chief executive officer David Whiteley.
The number of financial planners employed would remain stable, Rice Warner found, with growth dependent on how quickly the sector adapts to the shift in demand for scaled financial advice.
The cost-benefit analysis finds that over 15 years, the benefits of reform will outweigh the costs even on the most conservative assumptions, Whiteley added.
"These findings show that the laws are a win-win for both planners and consumers," Mr Whiteley said.
However, the Financial Planning Association's Mark Rantall and the Association of Financial Advisers' chief Brad Fox questioned some of the findings, claiming the research neglected the negative side of implementing reform.
"One would hope that clients will see and trust financial planning more and hopefully access more advice," Rantall said.
"Having said that, there is a cost involved in all of that and the cost has been significant; many financial planners will struggle with those costs at a business level."
Fox questioned whether the research took into account the changing administration costs inside financial advice businesses, such as fee disclosure statements and other related changes.
"I also wonder if the findings take into account the fact that the industry spent $2 billion dollars on implementing the reforms and that many participants, such as platform providers, will try and recover those costs via their members," Fox said.
"In forecasting research the important thing is knowing and understanding the assumptions and the basis upon which they're made; we haven't had access to those so it's hard for us to comment on the outcomes."
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