2015 – A year of change and disruption


By Sarah Kendell

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2015 has been a huge year for the advice industry, both in terms of new regulations, government and industry movements shaking up existing business models, and an emerging crop of advisers and technology start-ups looking to usher in a new era of advice.

Regulatory measures had the biggest impact this year, with former Australian Prudential Regulation Authority member John Trowbridge’s independent report into the life insurance sending shockwaves through the industry in March.

Following a period of industry and government consultations, Trowbridge’s recommendations were implemented in the most part through the proposed life insurance framework (LIF) reform package announced in June, draft legislation for which is due to come before the Senate in early 2016.

The government’s response to the Financial System Inquiry was also brought down in October, including provisions to improve educational standards for advisers , strengthen ASIC’s powers and ease barriers to cross-border trade in managed investment schemes.

Draft legislation around improved adviser standards is also expected to hit parliament early in the new year, with the laws released earlier this month specifying advisers must have a university degree, a year’s training on the job and be required to pass an exam.

Additionally, after a year in flux the Future of Financial Advice bill passed the Senate in November with bipartisan support, and an amendment to extend the opt-in rule from 30 to 60 days.

Of course, regulatory changes were affected in the background by the continuing merry-go-round of federal politics.

Following Malcolm Turnbull’s overthrow of Tony Abbott in September, the industry gained a new Assistant Treasurer in Kelly O’Dwyer, its third in as many years.

One of O’Dwyer’s first moves was to delay the implementation timeline for the LIF reforms instituted by her predecessor, Josh Frydenberg, and to alter the original three-year clawback provision to two years, a decision which was met with support from the industry.

O’Dwyer was also quick to introduce draft legislation to give all employees a choice of super funds, as well as improve disclosure of funds’ portfolio holdings and available investment options.

Additionally, the new government continued Abbott’s enthusiasm for kick-starting Australia’s fintech industry, announcing a range of innovation measures including crowd-funding for emerging companies, tax breaks for early stage investors and a reduction in the default bankruptcy period.

Fintech was another major theme in the advice industry in 2015, as the Stone & Chalk start-up hub opened its doors in August 2015 with 41 emerging fintech companies as foundation members, and the backing of major institutions including AMP, ANZ, TAL and KPMG.

There was talk particularly of robo advice and what it would mean for adviser businesses, and we saw the major banks dip their toe into the robo space as Macquarie launched its fee-for-service robo advice brand, OwnersAdvisory, in November.

As advisers began to consider new forms of client engagement, there was also stronger advocacy from the younger generation, with the XY Adviser network beginning to gain momentum as it expanded its board to include more industry professionals and hosted a series of educational events.

At the FPA, there were also changes afoot as chief executive Mark Rantall announced he would be stepping down in February next year, to be replaced by current director of policy Dante de Gori.

Meanwhile, there was plenty of action on the mergers and acquisitions front this year, with NAB announcing in October it had entered into a memorandum of understanding to sell its MLC life insurance business to Japanese insurer Nippon Life.

Suncorp also announced it was closing down its aligned adviser networks Guardian Advice and Suncorp Financial Planning, while Fortnum Financial Advisers acquired dealer group FPSA from netwealth, although only six practices from the original group chose to move across.

In the super space, different industry groups still struggled to come to an agreement over exactly how much was required for a comfortable retirement, while the gender gap in super balances remained, with Roy Morgan figures indicating women ended the year with an average balance of $129,800 compared to men on $194,700.

It’s been a big year and with many of the regulatory changes in particular set to come into force next year, there will no doubt be plenty of big stories for us to bring you in 2016.

On behalf of the financialobserver team, in my new role as editor I’d like to take the opportunity to wish you a happy and relaxing Christmas and New Year break.

We will be back for our first edition of 2016 on 11 January.

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