Impact of the Hayne Royal Commission on the Operating Model of Australian Financial Advice Firms

Impact of the Hayne Royal Commission on the Operating Model of Australian Financial Advice Firms

The financial services Royal Commission's final report has resulted in significant reforms in the financial advice industry. The Hayne's recommendations represent a challenge to advisory firms to review their current business operating models in order to enhance customer outcomes and profitability. This thesis aims to explore the impact of the Royal Commission’s recommendations on the operating model of advice businesses in terms of advice products, processes, delivery models and customer segments. Furthermore, this thesis seeks to investigate whether the Royal Commission’s outcome has accelerated the use of enhanced technology solutions within the operating model of advice entities. To identify the key challenges confronting advisory firms whilst implementing the Commissioner’s recommendations across their operational models, a qualitative research design has been adopted. Semi-structured in-depth interviews were conducted with 24 advisers and managers engaged in the operation of financial planning services. At the same time, a thematic analysis approach has been used to interpret the qualitative data collected from the interviews. The findings of this thesis reveal that customer-centric operating models will become more prominent across the Australian financial planning industry in response to the Commissioner’s final report. The Royal Commission’s outcome has accelerated the use of advice technology solutions within the operating model of advice entities. It is found that financial advisers have started using more automated web-based advice services, which enable them to provide simple advice on a greater scale, and to accelerate the use of robo-advice models and digital delivery to mass customers in the longer term. The study identifies process and technology changes with technical and interpersonal skills development, as the critical challenges encountered by advice practices whilst implementing the Commissioner’s recommendations across their operating models.

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