David French | 16/03/2010 3:24:07 PM

This article was first publihed in The Morning Bulletin dated 13th March 2010. Titled 'All The Rivers Run'

One of the most intriguing aspects of Central Queensland is our, often overlooked, links with South Australia. An hour’s drive past Emerald the influence of the mighty Fitzroy gives way to the intricate maze that forms the Diamantina and Lake Eyre catchments. Notwithstanding the triumph of brute force over intellect that is Cubby Station, and the near term misfortune of residents, the rainfall across the Diamantina, Lake Eyre, Condamine and upper Darling catchments will bring economic joy to the agricultural community across four states. For the first time in years, the Murray will run to its mouth in the Southern Ocean. The effect of GDP is likely to be at least one per cent. At the same time the Ripoll enquiry into financial services threatens the rivers of money flowing to commission based financial planners. While the Financial Planning Association has flagged a move to fee based financial planning, the industry is “struggling” to come to terms with the concept. Most don’t want to change, often because their income is independent of effort. On top of a requirement to put clients first, the Ripoll report recommended that “government consult with and support industry” in moving away from product based commissions.

Many dismissed the recommendations as weak, but the likely outcome is that within five years financial planners, as they are known now, will not exist. Instead the industry will be split between sales people and professional advisors. The advisors will cover all types of personal finance and act as a hub between accountants, solicitors, Centrelink, superannuation and small business. They will provide broad, tailored advice on all these matters, drawing on particular expertise as required. They will charge a fee for service, based on the workload, for managing these things.

Despite frequent bad press, financial advisors are going to become more, not less, important to people. The interaction between personal tax, superannuation and Centrelink is just too complex for most people to manage. Even industry funds, long critical of financial planners, recognise this, as evidenced by their scramble to strike alliances with advisory groups. While the western floods will transform the economics of the outback, turning off the commission tap will transform financial planning. As a fee for service financial planner both events have certainly put a spring in my step.

The Investment Collective (AFSL 471728) is a non-aligned financial planning and investment firm specialising in providing tailored financial and investment advice for individuals and small business. Capricorn Investment Partners Limited's services include financial planning, share trading, portfolio management, insurance broking and self managed super fund administration. Additional information on services provided by The Investment Collective Limited can be found by following this link. Readers are reminded that this document has been prepared for general information purposes only, and any advice contained herein has been prepared without taking into account your financial objectives, situation or needs. Readers are advised to see their financial advisor prior to acting on any general advice.

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