If you’re in the Financial Advice Industry, then you’re likely very familiar with the term FOFA. But almost everyone else has no idea what happens behind the scenes in the financial advice industry, so I thought I’d shed some light on it for you.
FOFA stands for Future of Financial Advice. It’s an industry-wide reform meant to make the industry more transparent to the every-day person. It’s meant to protect you from those Financial Advisors who are only interested in their own wallet, rather than your well-being as a client. There are a few ways they are attempting to do this:
- by ensuring you know how much you’re paying your financial advisor for the services he or she provides you;
- by making sure you’re aware of the services they’re meant to provide you/that you’ve paid for, and
- by letting you know if you have actually received any of these services (according to the advisor). In order to achieve this, it means that you will soon be receiving a letter in the form of a Fee Disclosure Statement (FDS) from your advisor giving you all that information.
As a Financial Advisor with a high degree of personal ethics, it’s easy to get very annoyed at the additional administration involved with implementing these steps and with the work involved in creating administrative systems that will ensure we are compliant as a business. If you’re interested you will find the specific guidelines spelled out here: http://futureofadvice.treasury.gov.au/content/Content.aspx?doc=implement.htm
I guess the negatives always seem easier to focus on for some reason. But there is a bright side here which is simply that this reform, while adding more work to already busy financial advisors and planners, should actually improve the general level and quality of work in the industry. It will be more difficult for advisors to take advantage of people’s situations, as they’re more likely to be exposed.
I sometimes feel that financial advisors get a bad reputation as not being the most trustworthy people, and believe me, I’ve met a couple of the people who give the industry a bad name. But by and large, the advisors I’ve met are good people with their client’s best interests at heart. It’s good to know that the government is working to improve the standard and the ethics levels of our industry as a whole.
Here at Investors Direct Financial Planning, we pride ourselves on the good work we do and our Advisors genuinely care about the needs of our clients. I guess that’s why we’re growing as fast as we are. In fact, we’re recruiting just these types of advisors right now. If you happen to know anyone who’s qualified, who wants to work in a busy company and who has a high sense of personal ethics and doing the right thing by their clients, have them send me an email with their CV to firstname.lastname@example.org