Connect and grow 2021 Lifespan National Conference

The Lifespan Financial Planning 2021 National Conference was an amazing experience for all who attended. Whether virtually or in person, everyone had the opportunity to connect and grow together, which was the theme of the conference, with over 160 registered delegates participating.

With the continued growth of Lifespan, it was a valuable opportunity for both new and longstanding advisers to connect and get to know one another. Showcasing a wide range of presentations, from economist and finance industry expert Peter Switzer discussing the investment outlook for 2021, to presentations highlighting the importance of ethics, communicating with clients, cybersecurity challenges for advisers, TPD/trauma insurance, estate planning and generating income for retirees.  Feedback regarding our speakers was impressive, with an average score in excess of 4.4/5! 

Held from 19-21 May at the Pier One Hotel in Sydney, Lifespan National Conference 2021 was one of the first major live licensee conferences to take place since our last live National Conference in Canberra early last year! This year our conference closed with the traditional gala dinner, and a great time was had by all.

The 2022 conference will be held in March in Hobart, Tasmania!

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Building a thriving financial advice business

Lifespan Live: Episode 2 – Building a thriving advice business of the future

In the latest podcast episode of Lifespan Live, Michael Gershkov, Lifespan National Practice Manager, has an engaging conversation with Kris Meuwissen, owner and adviser at Wealtheon, a financial planning practice based in north-western Victoria.

Kris shares his insights into how the past 12-18 months has shaped his advice business to thrive, through embracing technology, and seeking the counsel of others, to help deliver a quality advice experience for Wealtheon clients.

We’re really trying to roll with the punches… We’re trying to make the client experience as amazing as possible with the tools and resources that we have.”, Kris says.

Embracing technology prior to the latest COVID-19 disruption, Kris has found that clients have also adapted well to interacting virtually over the past 12-18 months. It also has helped to streamline the advice experience for clients. Kris remarks, “We can utilise some of the best technology in the market, put it in front of clients, without having to send documents and wait for their return.”

The success and growth of Wealtheon, however hasn’t just come down to choosing the right technology solutions. As a small business owner, Kris has ensured that he has a good network from which to bounce ideas off and gain insights both personally and professionally.

You’re one of my first points of call Michael. You’ve been a mentor of mine for a long, long time, but I seek advice from a lot of different people.

I’ve actually been focusing quite a lot around seeking some counsel from people like psychologists… trying to understand, a little bit more how my client thinks. How I can actually get them to communicate what they value out of life to make the advice process better for them.”

We would like to thank Kris for joining us for this episode of the Lifespan Live Podcast series.

You can listen to this podcast here. (21 minutes duration).

Lifespan Live: Episode 2 – Building a thriving advice business of the future

Growing your financial advice practice in 2021

The changing financial advice landscape

In 2020, COVID-19 reshaped everything for financial advisers; from the way you do business to the financial landscape. The crisis highlighted the value you can add in helping clients to navigate turbulent markets, providing reassurance, compassion and understanding.

One of Investopedia’s Top 100 Advisers, Brittney Castro, CEO and Founder of Financially Wise shared her predictions for 2021. “With more and more people left with so much uncertainty with the markets, I think more people will devote time and energy toward their finances by taking personal finance courses, reading books, or hiring a financial planner to help them make smart money decisions in this new world that is emerging.”[1]

In Australia, demand for financial advice has doubled in the last five years

According to Investment Trends 2020 Financial Advice Report, an in-depth survey of the appetite and use of financial advice among Australians, 2.6 million non-advised Australians intend to seek help from a financial planner in the next two years. This figure is double the demand from 2015 (1.3 million), and significantly higher than the 2.1 million in 2019[2]. King Loong Choi, Senior Analyst at Investment Trends commented, “A record number of non-advised Australians realise they need professional financial advice. The pandemic has been a major catalyst, with 44% saying the COVID-19 situation had increased their likelihood of seeking advice.”

Currently, around 20 per cent of Australians are advised in some fashion. By tapping into the 40 per cent of the population who plan to seek advice[3], the opportunity to service clients increases significantly[4].

The number of advisers is shrinking

The opportunities are highlighted even more in light of the current reduction in the number and size of institutional players and the number of experienced advisers exiting the market. As educational pre-requisites are ramped up, adviser numbers are declining. According to Rainmaker Information’s Financial Adviser Report, adviser numbers shrunk 16% in the 12 months to June 2020, on top of a 14% drop in the 12 months to June 2019.[5]

Optimise your business model in 2021

With the market for advice shifting, 2021 is the perfect opportunity for you to take some time to reshape your business model, examining your cost and time spent per client. Many haven’t spent time analysing costs, due in part to the mixed income stream model many have grown accustomed to.

Changes brought about by COVID have helped advisers take advantage of technologies such as video conferencing, digital documents and e-signatures to streamline their practices, and gain back valuable time. In a user pays, fee-for-service world, it is crucial for you to understand how you can maximise the efficiency of your practice, including finding the right technological solutions to both suit and highlight the advice you give your clients[6].

Developing and expanding your practice in 2021

As the experience with COVID has shown, engaging in proactive communications with clients contributes significantly to higher client satisfaction (almost 30% higher, 56% compared to 73% satisfaction[7]). However, during this time many temporarily halted business development activities to focus on existing customers. For those wishing to expand your practice, optimising branding and marketing efforts is an important next step.

While 2021 will bring its own set of challenges, the year ahead is a unique opportunity for you to set yourself up for future success. We’re here to help.

What are you waiting for?








Challenges and opportunities for financial advisers in 2021

Challenges and opportunities for financial advisers

After a year of challenge, advisers might be hesitant to acknowledge that 2021 might prove to be more of a mirage rather than the promised land of calm that many had hoped for.

In 2020, advisers were asked to bear perhaps more than their fair share of challenges. Extreme market movements, ongoing regulatory pressure and uncertainty, and the need to quickly adapt to distanced client servicing as anxieties mounted over the market’s volatility, placed advisers in an almost impossible position.

Yet despite all of 2020’s trials and tribulations, the financial planning community triumphed. Advisers continue to do their many varied jobs, and now find themselves on the cusp of a year which they hope will provide some much-needed relief.

However, 2021 looms as a time in which advisers will again find themselves challenged by circumstances beyond their control, but not their capabilities. As ever, with great challenges come great opportunities.


For advisers, the next 12 months will in large part be typified by a handful of ongoing challenges, particularly the difficulties associated with meeting the sector’s educational requirements and the provision of life insurance advice.

As advisers attempt to guide their clients through the economic recovery from COVID-19, the additional effort necessary to meet the education requirements is likely to push many dedicated practitioners out of the industry.

A lot of advisers are taking it personally. I don’t blame them. Having decades of experience and still needing to prove your worth with additional study – which may not be relevant to your specialisation – would be frustrating. As a result, we’re seeing an enormous amount of knowledge and capability exit the industry, robbing us of a generation of mentors to those just entering the profession.

Some of our industry’s most experienced hands are finding the hurdle just too high to jump, forcing years of nuanced understanding of portfolio construction out of the pool of advisers serving Australians.

For advisers who have made the decision to stick it out, 2021 will see them spend a large portion of their personal time on additional education, rather than with their families.

In the wake of the Royal Commission, the other major challenge for advisers in 2021 will be the provision of life insurance advice as commissions dry up. Younger clients with families and mortgages can’t afford to pay for life insurance premiums out of their own pockets, and many are turning to their superannuation balance as a funding mechanism. As we know, this has a profoundly negative impact on clients’ long-term balances, which means that it isn’t a sustainable exercise. But with clients not willing to pay out of their own pocket, it begs the question: how do we avoid a mass underinsurance problem?

My fear is that we are exacerbating an already sizeable issue. According to Rice Warner, Australia’s underinsurance gap is growing[1], and by cutting commissions in half – and close to zero – the only people who will be able to attain insurance advice will be those with the will and capacity to be able to pay for it. The reality of life is, people aren’t naturally interested in insurance, the case has to be made for its benefits.

Advisers can restructure their business to ensure that they only service clients who can afford to pay a fee, but the real loser at the end of the day is the Australian consumer and their dependents.


On the flip side, challenges often present opportunities. In 2020, advisers took the challenges before them and found ways to streamline their businesses and service clients more effectively, using adversity as an opportunity to re-orient their business around more efficient investment products such as managed discretionary accounts.

In much the same way, the challenges facing advisers in 2021 may yet prove to be significant opportunities for growth.

For instance, while it is true that overall the educational requirements are pushing many experienced advisers out of the profession, those who remain are the first in line to add orphaned clients to their book.

As a result, advisers will soon have a choice of clients to take on, which will ensure they serve those who are suitable for the advice they offer.

Recently released research[2] shows about four out of 10 Australians will seek financial advice over the next 12 months. While some of these opportunities may be small – and related to COVID-19 – some may be engagements with clients who hold a significant superannuation balance and are new to financial planning.

Currently, around 20 percent of Australians are advised in some fashion. By tapping into the 40 percent of the population who plan to seek advice, the breadth of opportunity to service clients widens by a significant margin, particularly in light of the industry’s shrinking pool of advisers.

As the industry professionalises, the new entrants to its ranks will come highly qualified, and hopefully with a greater skillset from the beginning of their careers. As a result, the public perception of advisers should improve to that of a professional consultant engaged to assist people in their financial affairs, in much the same way that a doctor is respected for the positive influence they can have on a person’s health.

With the market for advice shifting, 2021 may prove to be another strong opportunity for advisers to take some time to reshape their business model, examining their cost and time spent per client. Many advisers don’t spend time putting their business under the microscope in this way because of the mixed income stream model many have grown accustomed to.

In a user pays, fee-for-service world, it is crucial for advisers to understand how they can maximise the efficiency of their practice, including finding the right technological solutions to both suit and highlight the advice they give their clients.

While 2021 will bring its own unique set of challenges to advisers, the year ahead is also a valuable opportunity for those remaining in the industry to set themselves up for future success. Far from being concerned by the challenges in the year ahead, advisers should be energised by the opportunities for the sector – and their practice – to grow. Perhaps, after years of struggle, the coming year might finally bring some relief.

[1] Underinsurance in Australia 2020 –

[2] CoreData Q4 2020 Trust in Financial Services survey

25 years and beyond with Lifespan Financial Planning

For more than 25 years Lifespan Financial Planning has helped advisers and their clients build a better future for themselves. This is the story of Lifespan’s first quarter of a century, and its plan to grow into the future.

When John Ardino started Lifespan Financial Planning in 1994, he wanted to be independent of the big institutions which dominated the wealth management industry.

“The catalyst was the desire to have my own advice firm and to service advisers and accountants who wanted to enter the field. I wanted to control my own destiny,” he says.

At the time, financial advisers would provide their clients with financial plans governed by what the Lifespan Chairman says were “fairly rudimentary” disclosure rules, instead of the robust and heavily regulated statements of advice handed to clients today.

For Lifespan Chief Executive Eugene Ardino, John’s son, the firm’s birth meant everybody in the family needed to do their part as the business got off the ground.

“I remember the family conversation, being told that we all needed to tighten our belts because we were starting a business, and I was probably old enough to understand it,” he says.

“Perhaps it was a few years later but I also remember helping out with some photocopying as Dad wrote Lifespan’s first compliance manual.”

As the firm grew and its initial band of a handful of advisers quickly became hundreds, the support team also needed to expand.

“There was a need for us suddenly to do marketing, which I’ve never been great at. I actually remember the kids helping me with emails and databases and stuffing letters into envelopes,” he says.

“But we needed help with other things like software and brokerage management. So, we brought people in. One of the first people we recruited was a brokerage manager who in fact only left us just recently.”

Eugene says that even now the firm is still experiencing growing pains, pointing to the planning industry’s constant change and the increasing influence of technology-based solutions.

But as the industry has changed, so too has Lifespan, John explains.

“We have far more servicing staff now. For many years we had about 20 staff, but the team is now substantially larger in order to deal with the many additional compliance requirements and the need to monitor compliance and advice documentation,” he says.

“For many years we might have only checked 1000 to 1500 plans a year, now we’re doing between 7000 and 8000 plans in a 12-month period. Some days we have 30 to 40 new Statements of Advice to check, so the number of in-house compliance and technical staff that are monitoring and checking plans and files has escalated dramatically in the last few years.”

For John, that increased compliance staffing is one of the major differences between Lifespan and other licensee groups.

“Some people don’t like compliance, and that’s a reason why some advisers don’t join us. But the way I look at it is that most advisers would rather be with a dealer group that ensures every adviser in the group maintains the best standards and quality,” he says.

“Our number of clients now reaches into the tens of thousands and our ability to attract these wonderfully substantial, highly committed practices that employ quality staff and look for the best available technology is very pleasing.”

For Eugene, rolling out the firm’s constantly growing Managed Discretionary Account (MDA) service in 2011 has proved key to the business’ success and serves as a key milestone.

“That helped the business transform,” he says.

The MDA service now manages more than $500 million in client funds and recently joined the Australian retail platform with the largest annual net flow[1], BT Panorama.

In a year that for many advisers was in part typified by market volatility, Eugene says Lifespan has received extremely positive feedback for its MDA service, which helped advisers by ensuring their investment decisions were more quickly implemented across the entirety of their client base to protect portfolios or take advantage of buying opportunities.

He adds that he was “quite proud” of the firm’s 20th annual conference in Darwin in 2018 and has revelled in seeing some of Lifespan’s adviser businesses grow into very successful, award-winning firms, such as Finnacle, CBD Risk Management and Endorphin Wealth Management, who all took out IFA Excellence Awards in 2020.

“It’s nice to have been able to share in that journey with some of our advisers,” he adds.

John says it’s Lifespan’s strong reputation as a trustworthy and straightforward dealer group that should take much of the credit for its continued growth despite the financial planning industry’s ongoing contraction.

“At the end of the day, we’ve still got advisers that have been with us for 25 years. I believe that our growth is explained by the quality and experience of our people, our realistic approach and the respect we have for our advisers and their professionalism and independence,” John says.

Eugene adds that Lifespan’s team has strong connections with its adviser group, which has helped ensure advisers stay with the firm for the long haul.

“Having the right governance and compliance frameworks in place and attracting the right advisers who fit our culture has been key for us. There’s a clear expectation when people join, so they know what they’re going to get from us and our client-centric, pro-compliance culture. There aren’t too many surprises and we treat our advisers like family,” Eugene says.

He adds that maintaining those core values of integrity and a human touch will be key to the firm’s success over the next 25 years.

“But also, we need to continue to evolve and be aware of all the things that need to be done to adapt with the industry and our clients as their lives change,” he says.

Eugene adds that the ability to have scale and the firm’s privately-owned structure – which he says is important to advisers – will figure heavily.

“With the cost of advice continuing to go up and the level of compliance continuing to increase, having scale and good technology to be able to offset some of those increases is really important,” he adds.

John points out that Lifespan has successfully managed to avoid the issues which have derailed larger advice organisations, such as numerous complaints and professional indemnity claims which cause PI excess and total costs to skyrocket. The firm has already announced that its recently renewed PI insurance agreement didn’t cause it to increase its PI levy for advisers, unlike others in the market.

In an industry of constant change, Eugene says technology will be key for Lifespan’s ongoing success.

“Technology is going to be a very important part of the puzzle that all businesses need to get right, so enhancing our information technology systems is key. But so too is the ongoing improvement of our managed discretionary account solution, because that is a great way that advisers can add efficiencies to their business, and continue to achieve great outcomes for their clients and themselves,” he says.

“We want to continue to grow but maintain our soul and ability to really be a caring organisation that listens to its staff, advisers and service providers, and fosters an environment for great outcomes.”

[1] Plan For Life, Platform Wrap Report March 2020 data (net flow comparison performed excluding corporate super and on an individual platform basis) for the 12 months to March 2020. BT Panorama had the largest rolling annual net flow.

Eugene Ardino
Eugene Serravalle

IFA Excellence Awards 2020

There is no doubt that 2020 has been challenging, however at Lifespan we have continued to grow and support quality advice businesses, and this was recognised last Thursday night, with Eugene Ardino, Lifespan Financial Planning Chief Executive winning the Dealer Group Executive of the Year at the IFA Excellence Awards 2020. This is the second year in a row that we have won this award. This award was recognition of everything that Lifespan has achieved over the past year. We were also a finalist for the Dealer Group of the Year Award for the second year running.

Demonstrating the quality of the Lifespan adviser network, three Lifespan practices were also winners on the night. Congratulations to Finnacle – Transformation – Company of the Year, Lyndon Holland from CBD Risk Management, Client Outcome of the Year, and Glenn Malkiewicz, Endorphin Wealth Management awarded Goals-Based Adviser of the Year.

What an amazing result!

Let’s make the Retirement Income Review Worthwhile

The federal government has appointed a panel to undertake a review of the three pillars of the Australian retirement income system: the age pension, the superannuation guarantee (SG) and voluntary contributions. Here are the key issues I believe the review panel should highlight for further attention.

I must admit that I am not convinced that the retirement income review will deal with anything that the Morrison government deems remotely problematic for its re-election prospects, such as the inclusion of at least a portion of the family home in the pension assets test, increasing the age pension eligibility age and increasing the superannuation guarantee (SG) beyond 9.5 per cent.

Lifting the SG gradually to 12 per cent, as proposed, would increase fund flows to industry super funds, whose values are aligned with those of the unions – a group whose influence this government would very much like to diminish.

Having said that, it must be acknowledged that this review is an opportunity to confirm the baseline information on which future policy decisions can be made to deliver a much-needed reset of aspects of our retirement income system.

I don’t pretend to have all the answers but I do know that the best way forward involves strong political leadership and industry consultation, which will hopefully follow this fact finding review. Here are some points I urge the review panel members to consider.

Shifting the focus from accumulation to draw down

The focus of the Australian superannuation system until now has been on the accumulation phase – and that has been successful. Recent research has shown more than half of Australians aged 66 are not accessing the aged pension at all because their assets and incomes are too high, and only 20 per cent are on a part pension.

Regardless, both self-funded retirees and those entitled to the age pension need support, education and appropriate retirement-income solutions. The focus now needs to shift to helping all Australians achieve their income needs and goals in retirement.

There are a number of obstacles that need to be removed, or at least addressed, in order to optimise superannuation savings for the average Australian such as housing affordability, wages growth and persistently low interest rates. There is also the issue of too many women still retiring with inadequate superannuation balances.

The first generation of contributors to our compulsory superannuation system is about to hit retirement. Super funds must be prepared to meet the retirement income needs of this group.

The age pension system is outdated

Since the Commonwealth age pension was introduced in Australia back in 1909, life expectancy has gone up 25 years for men, to 80.5 years, and 26 years for women, to 84.6 years. Yet the age pension eligibility age has increased by just one year for men and six years for women.

With many Australians now enjoying a good 30 years of retirement, clearly, something’s gotta give. The age pension framework has simply not kept pace with Australia’s changing lifestyles and demographics. Its original role as a safety net has been transformed. The age pension now primarily serves as a supplementary source of income to superannuation savings.

Improve incentives to keep seniors working longer

People are living longer and the age pension eligibility age is increasing, albeit far too slowly, but incentives to keep working are not developing quickly enough.

People aged over 65 are healthier than ever before and, increasingly, want to continue to work in some capacity. My experience with elderly people also has shown that they are generally happier and healthier when they are productively contributing to society so long as the work is not too stressful. But financial incentives such as the Pension Work Bonus need to be improved and employers’ attitudes towards older workers must change. Tax incentives to employers of seniors would also encourage them to employ older Australians or keep more retiree-age people in the workforce.

Strategies to increase the ratio of workers to people on welfare

As the Australian population continues to age, the ratio of workers to people dependent on welfare falls. The vast majority of welfare payments are made to age pensioners and people on disability pensions; a relatively small amount goes to unemployment benefits. This trend is largely due to the fact that people are living longer but also due to the natural phenomena that as societies become more affluent, their citizens have less children per capita. This trend is obviously unsustainable and needs to be reversed if possible.

A significant lever to correct this imbalance is immigration. There is never a shortage of people wanting to migrate to Australia, and generally migrants are young people (the median age in 2017-18 was 26), often with families, ready to work and spend and contribute to GDP growth.

Sadly, more recently, there has been populist rhetoric against immigration and, as a result, the number of migrants and people with temporary visas allowed into Australia has dropped significantly in the past few years.

I have no doubt that this is one of the factors causing our economy to slow. The most counter intuitive reason I have heard is that immigration puts strain on our infrastructure therefore we should slow it down for a while. This is an infrastructure problem not an immigration problem.

If some of the lifts in a building broke down, you would not stop new tenants moving in or existing tenants from hiring new staff until the owners got around to fixing the lifts. You would fix the lifts immediately, make do with what you have in the meantime so long as it was safe and allow business as usual. It is absurd to suggest that because our infrastructure needs to be enhanced we should reduce population growth. The very core of GDP growth is population growth.

With interest rates at record lows, now would be a great time to borrow to fund massive infrastructure enhancements, creating jobs and GDP growth. A new influx of immigrants could help do much of the work, and at the same time increase the ratio of workers to people on welfare.

Instead, the government has taken a populist approach and fought to keep our budget in surplus, potentially missing a once in a century opportunity to borrow money for next to nothing to fund much needed infrastructure enhancements.

Former political foes, Paul Keating and John Hewson, have both spoken about the opportunity for an infrastructure-led recovery. I hope the government takes notice rather than taking the road that secures the most votes in the short term.

Increase the superannuation guarantee

Labor introduced legislation in 2012 to increase the super guarantee to 12 per cent by this year. The timetable was subsequently changed by the Abbott government with the SG now set to hit 12 per cent by 1 July 2025.

However, the Morrison government is facing increasing pressure from its own MPs and senators to delay or abolish the planned increases. Those on the other side of the debate such as Rice Warner are saying that a higher SG would alleviate pressure on the age pension system and grow capital markets, which would benefit the entire economy.

In my view, any increase to the SG rate equates to money out of the economy in the short term. The government has said that the current precarious state of the Australian economy is the reason for delaying this.

However, I suspect that the real reason is that it would see more money flow into the coffers of industry super funds, some of which would inevitably find its way to the Labor Party.

Address housing affordability

Another major issue that directly impacts the pension system is housing affordability. Our retirement system was built on the assumption that most people would own their own home by the time they finished working. As it currently stands, an increasing number of Australians are likely to be paying rent in retirement, placing greater pressure on the pension system.

Recent modelling from the Grattan Institute found that the number of people aged over 65 who own their own home will fall from the current 76 per cent to 57 per cent by 2056. For low-income retirees, it will be well under half. The pension system, as it currently stands, is simply not equipped to manage these pressures. Rents have been outpacing the CPI-indexed government rent assistance payments for some time now, particularly in the major cities. There is a definite need to increase assistance for the growing number of retirees who do not own their own homes as well as thinking outside the box on housing affordability.

Treatment of the family home

Is it time for the high-value family homes to be included in the age pension assets test? Again, the likelihood is that no politician would touch this with a barge pole. Just look at what happened to Labor after it took the removal of franking credits to the last election.

Be that as it may, I don’t believe we should throw our hands in the air and give up on the implementation of big picture policy reform in this country. As Paul Keating recently remarked, large scale reform will be necessary to halt the increasing levels of inequality in our society.

There are clear anomalies with the current system. For example, a retired couple with a home worth $4 million and $245,000 in assets is eligible for a full pension, while a couple with a home valued at $500,000 and $860,000 in assets will receive no pension at all.

However, there are two sides to this issue. The above example shows an extreme situation that I am sure most would consider to be quite unfair to the second couple. Others would say that it is equally unfair that a couple who have lived their lives in an affluent area and are entrenched in that community, are forced to downsize to the point of having to move to where housing is more affordable.

So, this is certainly a tricky one. Innovation and competition in the home equity release product market may result in retirees being able to remain in their homes, but to cheaply and efficiently access some of the equity to top up their retirement incomes.


In any case, these changes are going to be unpopular. Whichever way you look at it, they will take money out of the pockets of elderly Australians, which are a large and growing portion of the voter base. However, the longer this issue is left, the worse it will become. Slow and steady change over the next 10 to 20 years will be much more palatable than large sudden shocks. This is also why we should look to employ other mechanisms such as migration to minimise the impacts on the elderly.

How the ban on adviser commissions could hit hip pockets

The federal government might have voted against a royal commission into misconduct in the banking and financial services industry 26 times but it’s making up for lost time.

This month the Senate passed the first substantive stand-alone piece of legislation relating to issues raised by the royal commission. The bill ends the payment of product commissions from fund managers, super funds, insurers and other financial product providers to financial planners and advisers.

The financial services industry is warning that, ironically, higher fees – not lower – could be one of the “unintended consequences” of the legislative change. 

If that sounds a bit like deja vu, you’d be right. In 2012, the then Labor government banned commissions for advisers as part of the Future of Financial Advice reforms.

This represented an overhaul of the mainstream remuneration practice in the industry, meaning consumers, and not product manufacturers, would have to pay for the provision of advice. The thinking was that removing this “conflicted remuneration” would allow consumers to get more objective, impartial advice.

But the rule was not applied retrospectively, which meant advisers could continue to receive any ongoing commissions relating to investments they made before the legislation’s effective date of July 1, 2014, under a so-called grandfathering clause.

After evidence to the royal commission that consumers had been charged “fees for no service”, Commissioner Kenneth Hayne concluded that the carve-out allowing these grandfathered commissions should be “repealed as soon as reasonably practicable”.

After the Parliament did exactly that on October 14, Financial Services Assistant Minister Jane Hume said one of the key benefits of the reform is that it will end the conflict whereby some advisers may have been hesitant to move clients into newer, better-performing products because they were receiving an ongoing commission on the old one. “Consumers will benefit from lower fees following the removal of conflicted remuneration for financial advice,” Hume said.

Higher fees

But the financial services industry is warning that, ironically, higher fees –not lower – could be one of several “unintended consequences” of the legislative change.

Phil Anderson, a policy expert at the Association of Financial Advisers, says advisers have been reviewing whether their clients should be switched into newer products ever since the FoFA reforms, and the total size of the pool of commissions paid to advisers has been diminishing as a result.

But there are important, technical reasons why it might not be in the client’s interest to switch to a newer or cheaper product, he says, even though that seems counter to the government’s thinking and conclusion of the royal commission.

GCT and Centrelink triggers

He says there are certain circumstances where the stopping of grandfathered commissions could actually leave a consumer worse off.

“The requirement to move product could trigger a capital gains tax liability,” Anderson says. “In some cases, the client may be advised to defer the recognition of a capital gain to a later time, when they have a lower taxable income.”

In addition to CGT concerns, advised consumers could also lose Centrelink benefits. In 2004 and 2007, the federal government made changes to the assets test for eligibility for social security payments to include income streams such as annuities and account-based pensions, which were previously exempt.

But these changes were grandfathered so that people relying on the previous rules in planning for their retirement were not disadvantaged.

“If they were moved to modern products now, this grandfathering would be lost and the income stream would be fully included in the asset test,”  Anderson says.

Another potential pitfall could face Australians in superannuation products that include a life insurance policy.

Switching super

Switching to a new super fund could cause them to lose cover which might not be attainable at the same rate or in the same form if the client’s health circumstances have changed over that period.

If rebates of commissions that would have otherwise been paid to advisers are passed on to clients directly – as some of the large bank-owned wealth management companies are already implementing – this could also have implications for older clients.

“A rebate will in many cases be taxable income and in the case of partial-age-pension clients may reduce the client’s pension by 50¢ in the dollar,” Anderson says. “In a limited number of cases it may push the client above the maximum income test threshold for the pension.”

Regardless of age or life stage, switching to a new investment product could also result in hefty exit fees, Anderson adds.

Although exit fees have been banned in the superannuation system, they still exist on some other financial products.

John Ardino, chairman of Lifespan Financial Planning, agrees that clients could face Centrelink and CGT consequences, which could make switching them into newer products problematic.

Aside from these technical issues that could create unintended costs or losses in some circumstances, the industry also warns that ending commissions will simply push up the price of advice, making it more expensive for those who already have an adviser and less accessible for those who don’t.

“The result of all this for consumers is that it will raise the costs of advice, reduce access to advice and leave thousands of clients orphaned without any access to advice,” Ardino says. “This is a major disruption for clients
needing financial advice and a major disruption to the practices of advice providers.”

Anderson warns that if some clients whose advice is now subsidised by product commissions decide they cannot afford a fee for service, their investment portfolios and financial lives could be adversely affected.

“If clients lose access to advice, then they may find over time their asset allocation progressively moves away from their target asset allocation,” he adds.

Beware the warnings

But consumer advocacy group Choice, which has long argued that the grandfathered commissions carve-out should be repealed, said consumers should be wary about warnings from industry bodies and lobbyists.

“There have been countless instances where the industry has squealed about unintended consequences to prevent and slow down reform and there has been no basis to the concerns,” says Choice campaigns manager Erin Turner.

While she doesn’t dispute that switching products could result in complexities and even financial losses, she says that is precisely why conflicted payments needed to end.

“A good, holistic, expert adviser is going to consider those issues and will consider the costs as well as any potential benefits,” she adds. “At least you can now know that the conflict is not there and they can give you a more objective assessment.”

Lifespan scores triple win at 2019 IFA Excellence Awards

I am very pleased and proud to announce that Lifespan Financial Planning scored three gongs at the 2019 IFA Excellence Awards in Sydney last Friday, the 6th of September.

Our National Practice Manager, Michael Gershkov, the received Practice Management Consultant of the Year Award, while Prashant Nagarajan from Finnacle (one of our Victorian based advisers) won the Innovator of the Year Award. I was very honoured to win the Dealer Group Executive of the Year Award – an achievement only made possible due to the outstanding efforts of the Lifespan head office team, our incredible network of advisers and of course the unwaivering support of my wife Pamella. So thank you to all of you.

We also had a number of other Lifespan advisers nominated as finalists for awards including Gail Gadd, James McFall from Yield Financial Planning, Phillip Richards, Robert Rich & Glen Malkiewicz from Endorphin Wealth as well as Smart Home Deposit.

Michael was a worthy winner of the Practice Management Consultant of the Year category. Since joining Lifespan earlier this year, he has worked tirelessly to support our advisers. From helping them recruit and retain staff, to engaging with clients, build referral partnerships and find ways to improve efficiencies through technology. Michael has done a great job of partnering with our advisers for success.

The Innovator of the Year award was thoroughly deserved for Prashant, who has shown an incredible amount of initiative and creativity in incorporating digital solutions to enhance the efficiency of his business. See below for a very interesting summary from Prashant on his approach to digital innovation.

In 2020, we hope to assist more of our advisers to participate in the IFA Excellence Awards. The process is very rewarding and a terrific way to reflect on what you have done and articulate your value proposition. We will issue more information on how you can prepare your business for awards success in the near future.

Prashant Nagarajan from Finnacle – Innovator of the Year

“As a financial adviser and principal of a technology focused financial services business, I must always think about better ways of doing things, especially regarding the use of technology and automation in the advice delivery process. We have a number of practices within the business that are both innovative and demonstrate a new way to think about client engagement. We conduct our meetings via video conferencing to reduce wasted time and travel commitments for our clients. This also means we can service clients anywhere is Australia and around the world.

“We also write and draw throughout our meetings using new technology solutions, while sharing the screen with clients to create an interactive and highly informative experience. This also allows digital signatures and recordings to help with compliance and education for clients which can be reviewed and enjoyed anytime.

“We have created online data capture forms making the completion of important compliance steps easy and simple for our valued clients, and when submitted they are automatically emailed at the press of one button. We have found clients do not wish to deal with paperwork and at Finnacle, we have none!

“When it comes to marketing, technology has become our primary source of lead generation. This has been integrated with instant text notification when someone has submitted their contact details for one of our promotional campaigns so we can get in contact with them within minutes.

“Clients love our service offering which is based on a subscription model (similar to a phone plan) where ‘members’ choose the services or advice solutions they want plus they can pay for these via a monthly fee. We believe this is the new way of providing financial services, especially to the younger generations (who are our target market).

“With a team of four and a network of specialist referral partners to help clients, our innovations have created an improved low-cost business model coupled with significant financial gains now and down the pipeline. Process efficiency has resulted in very high customer satisfaction levels demonstrated in regular client surveys.

“Zoom meetings, online data capture and automated social media advertising have resulted in a more systemised way of doing business where leads are generated regularly, information is collected in a timely manner and we have many touch points with clients without them having to travel.

“Our business innovations have also helped with the satisfaction of our staff as they can work from home and in their own time frames. The continuous technology developments available to us ensures new innovations can overcome most issues we are faced with and what are problems for some advisers become opportunities for us. In turn, our business gains leverage by being a low cost, efficient solution which translates into a very affordable service for our Gen Y and Millennial clients.”

Lifespan Financial Planning throws weight behind advice industry fighting fund

Lifespan Financial Planning throws weight behind advice industry fighting fund

Lifespan Financial Planning, one of Australia’s largest privately-owned financial advice networks, has thrown its financial support behind the industry’s constitutional challenge to legislation to ban grandfathered commissions and encouraged its adviser network to do the same.

Lifespan has contributed $10,000 to the fighting fund set up by the Association of Independently Owned Financial Professionals to defend the property rights of financial advisers. Lifespan will top this up with a total of 50% of the individual contributions made by its 180-strong adviser network.

Lifespan founder and executive Chairman John Ardino said the legislation before the senate to abolish grandfathered commissions would increase the cost of receiving financial advice and lower consumer access to advice significantly when the opposite was needed.

“Our industry is at a critical crossroads. The outcome of this challenge in the High Court of Australia will affect the industry for years to come. We believe we should be doing as much as we can to ensure that outcome is a positive one for our clients, ordinary Australians who need access to advice for their wellbeing, as well as the advice industry which is being unfairly treated. The government adopted these flawed recommendations from the Hayne Royal Commission without any objective justification that grandfathered commissions have caused any harm to clients,”

he said.

Moreover, Ardino says “the commission’s recommendation to abolish Grandfathered Commissions is invalid because the commissioner failed to follow the directive in clause K of the terms of reference requiring consideration to be given to the impact of his recommendations on the economy, the cost and access to advice, competition and other factors.”

Mr Ardino added that grandfathered commissions involve no misconduct, no fees for no service and no breaches of professional standards or community expectations.

“Grandfathered commissions are legitimate income supported by the advice to the Labor government given by the Solicitor General in 2011, which Bill Shorten announced at that time. In effect, he said that these commissions constituted property rights protected by the constitution and that the government could only abolish them by compensating planners on just terms.

“The Government and Commissioner Hayne have falsely argued that this 2011 advice no longer applies. Moreover, there is a real risk that adviser property rights may be wiped out unilaterally by fund managers feeling obligated to stop paying grandfathered commissions, potentially in breach of their distribution agreements.

“Advisers may have to litigate against fund managers as well if it can be shown they acted improperly,”

Mr Ardino said.