Three pro bono financial advice pilot programs have begun in the past 12 months, and two of them are aiming for nationwide expansion, writes Simon Mumme.
Not all of the recent financial pain in Australia is due to the sharemarket downturn. Many Australian farmers have become saddled with debt in an effort to keep properties running, while money troubles continue to undermine some urban families.
With no means to pay for advice, these people have traditionally been excluded from the wealth management industry.
Their common fiscal problems – often involving debt, repossession, and budgeting – are usually handled by financial counsellors. But some financial planners and dealer groups are piloting programs in which participating advisers make themselves available to work on more specific concerns, such as access to superannuation under duress, savings strategies or insurance cover, on a pro bono basis.
Last month AMP announced it would undertake a six-month pilot, in which 12 advisers from the dealer group will take referrals from two financial counselling services run by The Salvation Army: Moneycare and the Northside Women’s Service.
Before this, the South Australian arm of NAB Financial Planning set up a similar partnership with Anglicare. And in July 2007, the Sunraysia chapter of the Financial Planning Association (FPA) teamed with local Rural Financial Counselling Service (RFCS), to offer pro bono advice to farmers in Mildura.
The NAB and FPA Sunraysia pilots were initiated by planners in both communities while the FPA put guidelines in place, such as processes for the referral systems and liaising with local members, says Jo-Anne Bloch, FPA chief executive.
The Sunraysia partnership “started with the FPA members”, Bloch says, while the association “helped to break down the barriers – we vetted a lot of ministers and local members”.
Without a national partnership – say, for example, with the RFCS – this process is “very ad hoc”.
Steve Helmich, AMP director of financial planning, advice and services, says the dealer group sought out The Salvation Army as a partner for its pro bono program. The AMP planners will be available to handle clients referred to them from the Sydney, Newcastle and Canberra offices of the non-profit organisation’s counselling services.
The demand for the planners’ input cannot be forecasted, Helmich says, since it depends on the type of financial problems the non-profit organisation’s patrons have.
“We could get to the end of the year and end up with 20 plans, or it could be 12,” he says.
Helmich says the pilot will provide an indication of the work required to set up a national pro bono program.
In Mildura, the three RFCS counsellors have to date made 10 referrals to local FPA members.
Lyn Heysman, who is principal of a Financial Wisdom practice in Mildura, a rural financial counsellor and part of an industry and government taskforce monitoring the pilot, says the partnership has expanded the range of options available to drought-affected farmers that need financial advice.
She says a pro bono partnership is required since Financial Services Reform (FSR) prevents counsellors from advising on specialist investment products, superannuation, insurance and taxation.
“They work with accountants and bank managers. They can’t give advice,” she says. But while counsellors’ awareness of what pro bono advisers can provide their clients is “beginning to gain momentum”, more education is required so they can better tap pro bono resources.
Graeme Thornton, a counsellor with the RFCS, says the partnership is beneficial but the small number of referrals to date is due to the fact that many farmers receiving counselling are in financial crises.
“They are focused on immediate issues rather than wealth accumulation and future directions,” he says.
The FPA has also established a pro bono program to enlist more advisers to the field, in which planners register to make themselves available to provide free advice. So far, roughly 30 planners have joined, Bloch says.
It will act like a clearing house to link requests with advisers. But the local partnership model will still be required since the association does not have enough resources to assess individual requests that are not sent by a third party.
The FPA is in contact with rural and urban financial counselling groups, including the RFCS and Centrelink, about partnering to provide pro bono advice on a national basis. But “it’s probably better done locally,” Bloch says. If you had a national social agency co-operate with us, it would still be delivered through local chapters, by our members.”
Heysman is keen to see the Mildura program expand and will introduce a training module for counsellors engaged in a pro bono advice partnership during a presentation in June.
“I hope this is one of many projects and that the drought breaks soon,” she says.