Looking at the year ahead, what do you think will be the big issues affecting you (as a financial planner) and your clients in 2017?

Daryl La’Brooy CFP^®

Financial Adviser, Hillross Financial Services

Licensee: Hillross Financial Services

It appears the world economy may be impacted by two key political events which have occurred in 2016, namely Brexit and the election of the new US president. Notably, the outcome of the impending French and German elections in 2017 will also have an impact.

The subdued economic recovery since 2009 has led to political backlash in many parts of the developed world. This voter displeasure has produced volatility on world share markets. It has also led to less certainty, with investors generally becoming more cautious when events are less predictable.

So, in some respects, 2017 looks similar to that which we experienced in 2016, with subdued economic growth and low investment returns, but with even more political uncertainty.

In the face of this heightened uncertainty, the need for clients to hold an emergency cash reserve is a must. It’s also advisable to ensure they are in an appropriate risk profile, just in case further volatility occurs, and that client investments remain sound.

Many of my clients are receiving part Age Pensions and after the 2017 changes, there should be some certainty about their continuity until the next Federal Election.

Some clients are fortunate enough to be purely living off the income from their investments and if these clients are able to stand a potential higher rate of volatility in relation to growth assets, they should then be able to get through 2017 in good shape, as share dividends are not forecast to fall during the next calendar year.

For retired clients, the certainty of a constant income flow is always a major issue, and if they are drawing on capital, decent returns have been a concern over the last decade. A rise in returns from asset classes over the next 12 months does not appear to be on the cards.

For clients who are working and continuing in their jobs, saving money for retirement and reducing debts will be the key issues they need to address in 2017, as it was in 2016.

Wayne Leggett CFP^®

Director, Paramount Financial Services Group

Licensee: Fortnum Financial Advisers

Starting from the first day of the New Year, with the reduction of the ‘taper rate’ for the Age Pension assets test, to the changes to super rules expected to take effect from 1 July, there are likely to be even more issues than most years for us to contend with.

From the perspective of a client, their issues this year will be no different to those I have encountered in every one of my 37 years as an adviser. These include: how to protect myself and my family from financial stress; how to best manage and clear my debts; and how to save for a comfortable retirement.

Irrespective of the short-term implications of legislative change, market forces or political factors, such as the recent US Presidential election, the challenges facing our clients, and our role in assisting them in meeting these challenges, will most likely continue to be as it has always been.

And would we want it any other way?

Charles Badenach CFP^®

Principal and Private Client Adviser, Main Street Financial Solutions

Licensee: Fitzpatricks Private Wealth

The big issues in 2017 are likely to be:

• The Trump Factor: Markets dislike uncertainty and Donald Trump’s election as President of the United States risks ushering in a period of policy uncertainty. Some of Trump’s stimulatory policies, such as personal and corporate tax cuts and increases in defence spending, could boost markets but longer term may have budgetary implications.
• Rise of fintech: We are now seeing the evolution of niche companies providing add-on services, enabling us all to work smarter, not harder. Some examples that are likely to be prominent in 2017 for planners are Acorns, adviser intelligence, DomaCom, and Suite Box. For clients, the key ones are likely to be Self Wealth, Stockspot and Society One.
• Implementation of super changes: With the Government constantly changing the goal posts on super, it has lost the trust of many Australians and it will be a challenge to regain this in the near term. Whilst it has slightly adjusted a number of the proposed Budget changes, the feeling of distrust remains.
• Institutional adjustments: The ANZ’s announcement that it is considering selling key parts of its wealth management arm could potentially be the start of a range of structural changes in the industry if the other three banks follow this lead.
• Finalisation of adviser education standards: Education and CPD are the foundations of any profession. Many in the profession would like these finalised, so we can all move on. Hopefully 2017 is the year!

Tim McLaughlan AFP^®

Strategy Adviser, Elston

Licensee: EP Financial Services

Given the number of changes to the superannuation system, the NCC cap backflips and the time it has taken to legislate following the Federal election, advisers and clients are looking forward to a time when new rules are set and financial plans can be made or adjusted.

The first six months of 2017 represent an opportunity for advisers to assist clients with their superannuation.

As the world adjusts to the 45th President of the United States, Donald Trump, advisers will need to help clients navigate through the unpredictable times that may follow.

Closer to home, in its most recent Statement on Monetary Policy, the RBA left rates unchanged, with some analysts anticipating further cuts in 2017. This may mean that the current environment of low yields on defensive assets will continue to be an issue throughout 2017.

Because retirees are generating such low rates of return from defensive asset classes, some are being forced to take on higher levels of investment risk, in an effort to maintain an acceptable retirement income, without cannibalising their retirement capital.

For all of these reasons, 2017 is likely to be a year of heightened volatility and uncertainty.