Is the financial planning industry genuinely facing a crisis of public confidence, or is the industry’s standing in the eyes of potential consumers no worse (or better) than it’s ever been?
No profession or industry has a God-given right to flourish, or even survive. To be successful, it must earn respect. Is the financial planning industry doing a good job of earning its consumers’ trust and confidence.
This is an issue Professional Planner intends to look into in more detail, and your thoughts and comments are welcomed.
Meanwhile, though, let’s review some of the factors playing out in the public arena right at this moment …
First, and most broadly, we have the global financial crisis (GFC). The most severe economic slowdown in recent memory is having an undeniable impact on consumer confidence – that includes consumers of financial planning services.
Next, we have the Parliamentary inquiry into financial products and services in Australia, with terms of reference including “the role of financial advisers” and “the appropriateness of information and advice provided to consumers considering investing in those products and services, and how the interests of consumers can best be served”.
We have the ongoing fallout from the Storm farrago, with the attendant negative publicity. And even planners who were not involved in the Storm problems are being beaten over the head – take, for example, the front-page story in a recent Weekend AFR: hardly a glowing endorsement of the planning business.
And finally, we have the unedifying spectacle of the Financial Planning Association of Australia itself taking legal action against a (non-member) financial planning firm, alleging defamation over recent advertising. That advertising raised questions about the association’s Code of Ethics – the very thing meant to guide planners on how to treat clients professionally, ethically and with the utmost integrity and respect.
These events might seem to be unrelated – though it’s possible to argue the GFC led to the Storm collapse, and also that recent negative press about the performance of financial planners is also GFC-related. And just what impact all of this is having on public confidence is, of course, difficult to measure empirically.
But anecdotally, it’s definitely having an effect.
In the Sydney Morning Herald recently there was a letter to the editor about – of all things – the current quality of the national strawberry crop (yes, that’s right, a letter about fruit).
The letter complained about the poor quality (specifically, the lack of taste) in strawberries. “These days strawberry growers must be as popular as used car salesmen and financial planners,” it said.
What shall we conclude, when the financial planning industry finds itself the butt of jokes about fruit, lumped into the same basket as used-car salesmen?
Such causal references might be amusing, and we might dismiss them accordingly, but casual references often belie a far more deeply held opinion.
(There’s also the point that it’s just one letter. However, newspapers have a rough rule-of-thumb that says if they receive one letter expressing a particular opinion, there’s a significant multiple of that number among its readers who hold the same opinion.)
What steps must be taken to address this view of the industry? Where to start? Who to involve?
What are your views? Is there a crisis of confidence in financial planning, or is a poor public perception simply a fact of life, and something that financial planners will always have to work around?