Thank the Lord that the post-March 6 rally has delivered a 50 per cent-plus gain, as this has helped heal the relationship between financial planners and the general community. This healing process post-crash and post-Storm is expected to take a couple of years, which could be hindered or helped by the three federal reviews going on right now.
Of course, these reviews could assist in improving the public’s attitude towards financial planning; but the most important reviews should come from every planner getting into self-help! More on that later. The sum total of these past and dramatic events for planners and their clients, combined with the changes that could come out of these reviews, could create a new and challenging nvironment for the industry. And that’s why it is timely for planners to do an audit, not only on their businesses, but also on themselves. Before addressing this issue, lets recap on what’s cooking in Canberra that could easily affect your appetite for financial planning. The Cooper Review is looking into superannuation, where fees and advice will be the focus, but there will be a whole host of related matters that will affect planners.
The Ripoll Inquiry is putting financial services under the spotlight following debacles such as Storm Financial and Westpoint. Finally, the Henry Review into the Australian tax system is bound to have major impacts on saving and investing. When the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, came on my Sky News Business Channel program, Switzer, he indicated that the changes that lie ahead would not all be draconian. Certainly the world could change for planners, especially if the Australian Securities and Investments Commission (ASIC) had its way recommending that both commissions and asset-based fees should go. For those alarmed at ASIC’s stance on fee for service, MLC boss Steve Tucker, also speaking on my show, suggested that groups like his were making submissions and he didn’t expect that to be a final recommendation from Labor MP, Bernie Ripoll.
Whatever happens, there will be some significant changes, and how the industry and you as a planner respond will be vital. And it is at times like this when I should remind you of my favourite cliché if nothing changes, nothing changes. These reviews are all about forcing changes on the industry that should have happened by self-regulation. If those changes had happened, there would have been a lot less chance of Storm Financial’s mistakes happening. How did it happen? Simple, a lack of leadership from banks, other financial institutions, financial planning groups, the Financial Planning Association, past government ministers at federal and state levels, as well as the media, who went along for the ride.
Jim Collins, in his book Good to Great, says the great US businesses he surveyed stood out from the crowd on some crucial criteria. Leadership was first and foremost, followed by having the right people, as well as deciding to be a world-class operation. An honest assessment has to be that financial planning generally has failed on these three scores, despite the fact that specifically there are some great leaders and people in the fraternity. However, the industry failed itself. Collins says the best businesses confront the brutal truth and this is what was missing. I was recently talking to my business partner, who is also the head coach in my Switzer Business Coaching operation, and I was trying to understand what type of person would be likely to sign up for at least the three-month program after their first free business assessment.
This was important customer feedback for my marketing team so that they could understand who our target audience is. She told me that there were three standout characteristics of business owners who signed up. First, they had been in business for a few years and had a turnover of more than $500,000. The second characteristic was that they were trying to grow their business, but it wasn’t easy and the owners/managers knew they needed to see things they weren’t seeing to make it happen. Finally – and my business partner said this was the most important reason for signing up – the people who opted for business coaching had a history of reading books, listening to tapes/CDs and attending seminars.
In a nutshell, these people were already committed to self-improvement. Sir Isaac Newton once said: “If I have seen further, it has been upon the shoulders of giants.” That’s what we all need in our businesses and ur lives. We need a greater commitment to selfimprovement which will create better self-leadership – this, Maxwell argues, is the starting point of leading others!
Peter Switzer hosts Switzer on Sky News Business Channel Monday to Thursday at 7pm & 10pm. You can contact him at www.switzer.com.au.