Much of their focus has been upon the commissions paid by retail funds. They've communicated this message through the media, advertising and a variety of other marketing channels (the blanket advertising of Southern Cross station in Melbourne was particularly memorable.) Read More
Planners hate this sort of stuff. They get huffy about it, complaining about this and complaining about that. But they never get any traction with their counter-arguments for one simple reason - the ISN has set the terms of the discussion firmly on commissions and that's a loser of a position, any day of the week.

In short order, when talking about commissions, the ISN is right.

Own the Argument

What planners should do is avoid the commission debate, because it's been settled. We need to move on and attack the sort of dicey accounting and approach to marketing that suggests the truth is little more than the occasional inconvenience.

Planners need to take the front foot when confronted with this sort of attack, but because of the overwhelming insecurity throughout the industry, we're collectively struck dumb.

So, here are two things that I think planners should do to try and address the criticism coming from the ISN:

Reposition the Argument

We need to get better at explaining what we do for clients, and better quantify the benefits our work can bring. In every Statement of Advice, I provide a guide figure that explains, in generalised terms, the level of benefit our work is bringing our clients. This is commonly a six-figure amount, calculated over a number of years.

ISN can carry on as much as they like about commissions, but until they start servicing their entire list of clients effectively and give them the value that I, and other planners can, I'll take it with a grain of salt.

(Incidentally, ISN will claim that they have a host of financial planners on staff. Ask everybody you know that has an industry fund and see when they last heard from a financial planner. Low fees are one thing. Inadequate service is another.)

Retaliate.

The ISN are not perfect in their operations, and they're hardly immune to criticism. So let's get on the front foot and retaliate. It has, after all, been some time since they started this Compare the Pair rubbish.

So let's talk about the preponderance of unlisted assets hiding in their portfolio, yet-to-be-repriced so they're propping up performance figures.

Let's talk about the woeful levels of customer service anybody daring to call in will face.

Let's talk about the wilful delaying tactics employed when somebody tries to transfer their funds out of an industry fund.

Let's talk about the opaque investment vehicles where nobody can really say, with any certainty, what's inside.

Let's talk about the slightly hypocritical feeling that comes with seeing an organisation rail against commissions, then spend millions advertising themselves.

Finally, let's talk about the relationship between industry funds, the country's unions and the government, and why it is that the government mainly chose industry funds as the default funds for most Australians.

Now, this isn't to say that everything the ISN says is wrong. Heaven knows planners deserve a bit of criticism. But whenever I see a campaign mounted with the sort of holier-than-thou attitude we're seeing at the moment, I always want to know what's going on behind the scenes. So, c'mon planners, get out there and defend yourselves.

Jordan Vaka is the managing director of Tangram Financial, a financial advisory company Doing Things Differently. He knows the deep and lasting value a trusted financial planner can bring to a clients financial position and wants to get people talking about the benefits financial planning can bring – not just the well-publicised negatives.

Which isn't to say that he thinks the industry is immune from criticism – far from it. But he knows of too many diligent, prudent and caring financial planners to write them all off. So he encourages all of these hard-working planners to talk about the good they're bringing to their clients, and fight for their industry's reputation.

Jordan also keeps a regular blog, My Advice to You Is..., which can be found at www.tangramfinancial.blogspot.com, where he is continually talking about what financial planning can do for people.

Comments (3)

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written by GAB, December 15, 2009

I think financial advisers need to hunker down and do their jobs rather than get caught up in a war with industry funds (easier said than done though). Everyone knows they have a vested interest in bagging financial advisers and commissions etc. If they're so "not-for-profit" driven, why bother with all the marketing? Most of them are falling on their own sword anyway when you look at their recent performance e.g. MTAA Super (I keep this type of ammunition on hand). Financial advisers don't look too good at the moment post Storm Financial and media focus on our remuneration. Maybe it's best not to draw any further attention to ourselves and work quietly together to improve our reputation. Fighting over types of remuneration is not helping our cause. We will never be a true profession whilst we are in the business of selling investments and insurance, but we can still operate in a professional manner.

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Commission v Fees
written by William Mills, December 15, 2009

We currently charge adviser service fees and have no difficulty in communicating our "Client Value Proposition" to our clients.

We regularly take clients away from Industry funds without any difficulty. Industry Funds constantly fail to provide appropriate advice on strategies to grow their members super.

Industry funds are good at looking after small balance super accounts and that is their nitch in the market. When members achieve a significant account balance they will naturally seek out advice to protect and grow their super.

As Financial planners we are the best equipped to provide this service.

We do not advertise our services and 100% of new business comes from client referrals.

Industry funds are always attacking us however despite their advertising we very rarely lose any clients to them.

Our clients vote with their feet so why worry about what they say or do. They cannot get our clients unless we fail in some way to look after them

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written by finplan, December 15, 2009

I completely agree that the ISN appear to have been successful in their anti commission rhetoric and have tried to focus the public's attention on one very narrow issue (somewhat ironic when the ISN also says that over 90% of Australians are disengaged with their super.....so possibly some of us are also being a little too touchy about how effective they really are?)
I also agree that planners do need to recognise their unique value proposition, but just as ISN are presenting a united front, so too professional planners need to present a united voice. That means no more bickering between the different professional bodies about who is better and a mutual respect for how different advisers operate. Just as we would not advocate a one size fits all approach for different clients, so we should not do for how we charge for our services (so long as the charges are within reasonable limits).
I would like to see the initiative being shown by the dealer groups and the professional bodies: too many seem to sit back and expect the individual planners to do all the hard work. If we are really to establish ourselves as a profession we need to go big and nationally and saturate the media as much as the ISN have. That means utilising marketing professionals and spending alot of money to be really effective and the problem we come back to then is, who pays?

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