For 90% of the younger population, most require financial guidance for the next 5 to 10 years. A whole of life plan is meaningless 40 years in the future especially if there is significant inflation.
For younger clients such limited advice may be about:
- Pay down personal debt
- Save for a home deposit
- Buy a home they can afford
- Start an investment plan,
- Manage Superannuation
- Financial survival when ceasing work temporarily
- A marriage breaks up.
Unless an adviser knows everything about the client, his family, goals, finances, risk tolerances, and intentions it is impossible under current legislation to provide this advice for a fee younger people can afford. Detailed explanation and client understanding of both the advice and its limitations is required by ASIC, but more information than required by the client. No doubt the reviled SOA will be remodeled, but not the adviser’s obligations, his time, and his expenses.
Using the old methods of SOA production, advisers in the foreseeable future may not be able to service younger clients profitably in spite of good intentions.
Today’s Australian (12.11.2023) quotes the following in the article Quality of Advice reforms an opportunity to lift our financial confidence:
While there is a critical need for retirement advice, our research shows those most open to receiving advice are under the age of 40. That is why the government’s wider proposed advice reforms are so important. The reform task is to help those Australians and many others who want and need advice but have no prospect of ever being able to afford it.
Financial Mappers is excited to show advisers how to afford and profit from servicing younger clients. Both Financial Mappers and Advice Online let advisers set clients on sound future pathways, and cement relationships with future higher net-worth clients.
The software does almost all of the work with the adviser adding his expertise. All reports are in shared in a multimedia format as younger clients expect. In fact, the advice process can be totally carried out online, exponentially extending the reach of a single advisor.
Glenis Phillips SF FIN
Designer of Financial Mappers and Advice Online