The financial services Royal Commission coupled with the recent collapse of Dover Financial Advisers suggests it should come as no surprise that financial advisers are finding it difficult to navigate Australia's regulatory landscape.
The 2018 Natixis Investment Managers Global Survey of Financial Professionals - which surveyed 150 Australians and 2775 people globally - found 90% of Aussie financial advisers are challenged to keep up with regulation.
Natixis Investment Managers Australia chief executive Damon Hambly said looking forward the key to adviser success will be their grasp of the risks inherent in volatile investment markets combined with the ability to look beyond short-term performance.
"In light of on-going revelations from the Royal Commission, and the increased focus on regulation in Australian financial services, it is not surprising that over 90% of financial advisers say keeping up with regulation is challenging, compared with only 83% of their global counterparts," Hambly said.
"At the same time, and despite the volatility that has returned to the markets after nine years of steady growth, Australian financial advisers are more bullish than international counterparts about the ability to find returns."
The survey finds Australian advisers are more bullish on returns, more confident of finding opportunities in low-yield environments but also more wary of geopolitical risks than global counterparts.
The survey laid down the top portfolio concerns for Aussie financial advisers. Sixty-eight percent said asset price volatility spikes were their biggest worry followed by interest rate hikes (59.3%) and low yields (41.3%).
Surprisingly, Aussie advisers were more upbeat than global counterparts in the ability to find returns in a low-yield world. Only 5.3% of Australian advisers said that it was "very challenging", whereas 25.3% of global advisers did.
Australian advisers were also more bullish when it came to return expectations, citing likely long-term performance as 6.4%, compared with 5.5% globally.
Globally, 58% of advisers judged geopolitical risks as likely to have a negative impact on performance, as compared to 75% of Aussie advisers.
Australian investors' exposure to active strategies stood at 63.5%.
"Eighty-two percent of Australian advisers said they used passive investments because of their lower fees, but at the same time, 73% said that investors have a false sense of security when it comes to passive investment," Natixis said.
"Despite indicating in Natixis' 2016 survey that they would moderate their active allocation to 63%, financial advisers around the world actually increased allocations to active strategies slightly over the past two years, from 68% in 2016 to 69% this year."
More than 50% of the advisers surveyed recognised their role in helping clients make rational decisions. However, 80% said keeping clients' irrational emotion in check was a challenge.
"It is interesting that globally as well as here at home advisers said that acting as the voice of reason, helping clients make rational decisions, and guiding them through the emotional side of investing was a major part of their role, with over 50% of Australian advisers saying this was very important. However, for Australian advisers, this had to be balanced with justifying fees, which 69% said was important or very important to their success," Hambly said.