Are Australian financial planners gutless and greedy, or do they have lower drivers?

One of my colleagues, Srinath, put this somewhat loaded proposition to me the other day. He called Australian financial planners complacent whingers. Sri is a relatively recent arrival in Oz, he has been here for five years and he tends to see things a little differently from those of us who have been around the Australian financial planning world for a while.

Anyway he is now a keen student of the industry and has studied it carefully. His argument goes something like this: “They complain but they are prone to pragmatism and in the end they are more likely to take the money and run rather than fight to change the system.”

I was rather taken aback at first as you might well imagine but after further discussion I thought he might just have something worth thinking about.

It seems to Sri that as a professional financial planner you let life treat you pretty poorly:

• You have lived with the stupidity and overwhelming bureaucracy of financial services reform – reform that hardly stopped a crook with access to a word processor from staying in business. Yet you turned your businesses upside down just to keep in the game.

• You live through industry funds tar and pasting your reputation every day without defence from the fund managers and others who profit from your work. After several years nothing has changed.

• You lived through a host of financial products that were far from “true to label” when the going got tough. And nothing happens to penalise those responsible.

• Your “education” is often sourced from those that would like you to sell their product. Your product “research” is funded by the same people. No wonder financial planners are so ill informed.

So the big question is why do you guys just sit there and take it?

I had a recent example of the third point. I am going to visit some international clients in the next while so I was doing a little background research on current issues in their marketplace. Planners were up in arms because a product failed to deliver the attributes claimed on the box. Something about the likelihood of loss and how it compared in terms of risk to mortgage trusts.  Planners are in the public arena screaming. Demanding that the institution put the money back in that has been lost.

This got me to thinking that in the 25 years I have been active in the Australian financial planning community I have listened to many rants, but I just do not remember planners taking their discomfort on investment product behaviour into the public arena. 

Sri’s theory is that the typical Australian planner has never really seen himself as an agent for the client, and is too close to the product and service suppliers. The example of this in the public eye at the moment, Sri pointed out, is of course the Storm fiasco. We find the FPA defending margin lending and blaming the client for expecting higher returns knowing and ignoring the fact that higher risk is always attached. 

I wanted to rebut and refute Sri – I really, really did. I wanted to stand up to him on behalf of my many colleagues in the financial planning community. I wanted to defend planners as being men and women of honour and principal – not scoundrels who merely whinge until enough money is thrown their way to shut them up.

I wanted to say “Sri, you just don’t understand – you’ve got it all wrong”. 

But I didn’t. Because deep inside I fear he might be right. Do you?