Something in the Air

The Rudd Government has wasted no time in announcing dozens of policies and be­ginning work to restore social equity and focus on issues like the environment and Aboriginal affairs.

Most people I talk with, regardless of their pre­vious political persuasion, are impressed so far, and most agree the atmosphere has changed significantly. It seems true that “we live in a society, not an econ­omy” – to quote one of the many great one-liners heard during the recent election campaign.

Using a recent dinner opportunity with Prime Minister Kevin Rudd, Treasurer Wayne Swan and Minister for Superannuation Nick Sherry, I asked many questions, and it will be interesting to see what changes are in store for this industry after the Bud­get.

I am sure all those involved in the Budget pro­cess from the government side have been well edu­cated, by me and many others, on the urgent need for many reforms, including the separation of advice and product in the financial planning world.

Unbelievably, this concept is still rejected by some large bank and insurance players, who are still so conflicted and blinkered that they seem not to notice the changes by many of their competitors – the latest announcements coming from NAB to introduce fee-only advice, and Westpac’s scaleable ‘fee-for-service’ offering.

Professional Planner’s readers, however, are most­ly on the same page regarding this issue, especially given that two thirds of you are accountants and private bankers. You have long been regarded as pro­fessionals, and have long charged fees and provided holistic advice.

Superannuation is definitely going to get a boost, as one of the abovementioned identities confirmed to me at dinner – but not to 15 per cent as Paul Keating, Garry Weaven and Bill Kelty intended, even though such a move would address adequacy requirements, still a key issue for so many fund members.

However, superannuation contributions will be raised during the Rudd Government’s current term, to maybe 12 per cent. Who pays, and how it is stepped-up, is not clear.

Certainly, legislation is on the way to further improve the advice world, help remove conflicts and improve clumsy disclosure legislation. Even though the Investment and Financial Services Association (IFSA) and some of their constituents will fight it all the way to the bank (as it were), they no longer have as sympathetic a government as before, and the new market environment is going to place more at­tention on the value and structure of financial plan­ning.

This will further boost the national savings pool and, in my humble opinion, increase the opportuni­ties for this industry to reach a wider market. But it will also make its transformation into a profession all the more critical.

This naturally throws the spotlight on to the skills shortage in financial planning, and raises the question of why it is still not more of a “preferred” career path – certainly compared to accounting or law, anyway. Financial planning pays just as well as these professions, and is just as needed by the com­munity.

It’s been interesting to watch the recent launches of exchange-traded funds (ETFs). Like listed in­vestment companies (LICs), ETFs are good value for consumers. But they don’t pay any commissions. SSGA and Barclays are the two highest profile ETF offerors, but more are on the way. This is further evi­dence of growing support for advice paid for some­how other than from a managed fund product.

Professional Planner continues to cut its teeth, and as we aim to educate and inform you on how to better provide advice and better serve the Australian community we are most interested in your feedback on what you think we are doing well or not, and what type of content you feel would better serve you.

Your opinions, thoughts and insights can be sent to us at feedback@professionalplanner.com.au – please remember to include your name and address.

Good financial advice is clearly never more im­portant than in times of market uncertainty.

I trust you enjoy our March edition.