Search

Over the past 10 years, there have been many financial scandals in the financial advice industry, which has caused substantial losses for investors. Large wealth institutions controlled by major Australian banks have significantly contributed to investor losses by promoting their products which were not always in the best interests of clients (Steen, 2016). Wealth institutions that manufacture financial products can subsidise the cost of the delivery of financial advice to customers, providing a strengthened competitive position against small privately-owned financial advice providers (North, 2015). The aim of this study was to explore whether the privately-owned financial planning sector is perceived by advisers to be growing or declining, and the main reasons for that growth or decline. To explore the views, attitudes and motivations of privately-owned financial planning practices, the study undertook a qualitative approach using an exploratory research design. The research design involved the recruitment of 51 privately-owned financial planning practice owners who were personally interviewed in the place of work, or via phone where on-site interviews were not possible. The interview questions were predominately semi-structured, with nine structured questions also included to enable a statistical analysis to verify the difference in performance between independent and non-independent advisers. The study found a strong argument that the privately-owned financial planning sector is in decline and will struggle to have any significant growth in the future. Due to the lack of future investment for expansion purposes, the low levels of new entrants, the inability to provide affordable advice, inadequate business planning, limited succession planning and the new regulatory requirements, the sector has significant challenges to overcome to achieve sustained future growth. However, the study found independent privately-owned advisers have a competitive advantage in the in

Inducement regulation is intended to target the conflict of interests between financial advisors and their clients. Nonetheless, it may also represent a 'public policy device' meant to conform the activity of European distributors with investor protection goals; indeed, by selecting the conditions under which distributors can freely collect inducements, the European regulator simultaneously shapes the market for financial services. Accordingly, 'spot advice' (which poorly performed in the past) is indirectly banned by the quality-enhancement provision set forth in art. 24 MiFID II, and the acknowledged importance of on-going monitoring of the portfolio opens up the collection of inducements linked to the provision of 'periodic advice'. Since this new regime will probably increase the overall costs of investment advice enlarging the 'advice gap', the European regulator tries also to foster the development of FinTech permitting the collection of inducements even outside the strict provision of investment advice. Nevertheless, the concerns regarding investor protection raised by FinTech services (which allow only a mere 'self-assessment' of the investor's profile) suggest a broader interpretation of inducement regulation, with the purpose of enabling investment firms to provide low-cost financial advice capable of effectively encompassing every stage of the investment relationship, from the early assessment of clients' characteristics and objectives to the on-going management of the investments ('simplified advice').