Every financial planner has an obligation to understand the big-picture, macroeconomic environment in which we live, says former Prime Minister Paul Keating.

Keating, a keynote speaker at the 2009 Securitor Convention in Darwin, says financial planners must learn to think for themselves, and not rely on economic “analyses” provided by the companies whose products they sell.

“It’s incumbent upon financial advisers and the advice industry to be offering coherent advice based upon a real understanding of macroeconomic conditions and policies,” Keating says.

“In other words: Whatever advice is forthcoming, rather than being something given by rote, or circulated within a platform or a firm, it [comes from] an intelligent understanding of the broad economic conditions by the adviser.

“I think it’s incumbent upon advisers to have this; if they do not have this, then what are they doing?

“If you want to say, ‘I am a financial planner, I offer value’, then it’s incumbent upon you to be current, and current means absorbing the nuances of news and information and seeing within it, discerning within it, a pattern. Upon that pattern comes the foundation of advice.

“You should stand out from the ruck when you say, ‘You hand me your assets and I’ll manage it for you’.”

However, Keating says he has no strong view on whether it’s appropriate that commissions be banned for advice given on Superannuation Guarantee (SG) contributions.

“I do not think I am the one to advise on the micro-management of the ‘wealth assistance’ sector,” he says. But he does support calls to reduce the overall cost of the system by harnessing economies of scale to improve productivity, but he argues that “the market will sort that out somewhere”.

However, Keating has labelled calls to reduce the level of the SG as a short-term policy to address current economic issues as “just foolhardy”.

“A national saving scheme like this is unique in the world,” Keating says.

“This is a national savings scheme privately invested.

“This should not be used as a macro-economic tool.

“The moment you tell a political system that there’s no solid commitment under public law – rather, that it’s something that can be varied – then the political system will start varying it. Usually down, not up.”

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