This article was originally published in The Australian’s The Deal magazine. If you are a subscriber you can access the article here.
What are the big challenges you have faced as an adviser this past year?
We are likely at “peak regulation” in our industry, following the royal commission into banking and financial services. A number of very positive long-term outcomes were achieved, such as higher educational standards for advisers and a majority exit of the conflicted institutions from advice.
However, the fallout has included many complex and duplicated compliance processes for advisers. This has ultimately increased the cost to provide advice, with Apt’s staff numbers having gone from 60 to almost 80 since last year.
Minimising the impact of increased expenses on client fees is a challenge. It also has the unfortunate impact of pricing out those Australians who need advice the most.
We have spent the past 12 months lobbying all forms of government with simple solutions to maintain access to financial advice for the average Australian. You are seeing many Australian advice firms focus purely on wholesale clients to avoid this regulatory red tape, but that’s not in our DNA, and it is not something we want to be forced into.
Apt has invested heavily in the next generation of talent. We have been working closely with universities across Australia and are seeing large demand for our internship programs, graduate programs and Professional Year initiative.
While this is proving very successful for us in attracting and retaining that next generation of talent, there are only a few firms in Australia with the scale to grow these programs. The competition for talent from other professions, including IT, accounting, legal and consulting, is real. I do worry about what this shortfall of talent will mean for Australians accessing advice in the next decade.
Our pro-bono advice program, working in partnership with the Cancer Council of Australia, has seen us assist dozens of Australians going through terrible circumstances. Maintaining capacity within our advice team to dedicate time to this program is critical. Again, few firms have the scale and capacity to help people who need it most. The industry needs help to be able to continue to serve existing clients as well as maintain the capacity for such important work.
What are you telling clients in this difficult economic period?
As inflation, interest rates and resulting recessionary risks continue to cause market volatility, it’s critical to stick to our investment principles:
• Stick to the plan: focus on your long-term goals. Our investment approach is focused on the long term and designed so that your portfolio can ride out any downturns – including this one. Stay the course. Despite how uncomfortable it may feel right now, it will prove to be the better option when looking back five years from now.
• Maintain a buffer of safety: holding a buffer of cash and term deposits has been a key strategy to provide a cushion against market downturns and protect capital.
• Take advantage of the weakness: market downturns provide buying opportunities to invest in long-term quality investments.
• Focus on quality investments: invest in companies that generate stable cash flows to support dividends and distributions, which are not connected to the movements in asset prices.
• Diversification across assets, classes, industries, sectors, and geographies is always key.
• Regularly rebalance the portfolio back to your risk profile to ensure that the portfolio is not exposed to unwanted risks and lock in profits.
• Remain calm and speak to your adviser before making any financial moves.
This article was originally published in The Australian’s The Deal magazine. If you have a subscription to The Australian you can read the article here: https://www.theaustralian.com.au/business/the-deal-magazine/big-challenges-for-advisers-from-fallout-from-peak-regulation/news-story/e69cc6e73e42a2e22b3b62132eb32f41
General Advice warning
The information provided in this article does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
