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Forward Thinking Magazine : August 2011
18 Macquarie Adviser Services Choice Capital James Taylor, managing director, Choice Capital, sees parts of the FOFA reforms as constructive, and a chance to cement relationships with clients. "We view it as an opportunity to build stronger ongoing relationships with clients, which should lead to greater referrals and business," says Taylor, while acknowledging that "it does increase compliance activity, which increases business costs." Taylor says the reforms won't mean his firm will need to change its initial value proposition, but they do mean advisers need to be more proactive and efficient in communicating with clients on an ongoing basis. "If you're not making full use of technology now, you will need to under FOFA." Taylor acknowledges the opt-in requirement will place additional administrative burden on the business, which increases the end cost charged to clients. "The cost of advice increasing is not a desired outcome of FOFA -- but a reality." "For us the biggest issue in the reforms is the proposed ban on commissions on insurance in super. My concern is that those on a tight budget won't want to pay for insurance advice, when they are the ones that need it the most." In terms of communicating the changes to clients, Taylor says at the moment his focus is more internal in terms of ensuring the service and pricing model will comply with the upcoming legislative changes. "We made the transition to an upfront fee-for- service model about 12 months ago in relation to super and investments, which is the best thing we've ever done. We'll be watching the reforms around insurance closely, and working with clients and product manufacturers to ensure that we can provide a cost-effective insurance solution."