In an exclusive interview with Professional Planner, the outgoing chief executive officer of the Financial Planning Association of Australia (FPA), Jo-Anne Bloch, looks back on the three and a half years of her tenure.
She discusses the FPA’s successes and failures – including Storm Financial – and the association’s aims and objectives in professionalising financial planning. She sets out clearly the tasks that face her successor – and reflects on just why ist is that financial planners love to argue in public.
Minimising risks
“I was thinking about the cyclical nature of everything, and there’s a cartoon that appeared in the AFR that I thought typified the whole FP process. It’s a cartoon that says something like: “Is financial planning hunting season cyclical or seasonal?”
And I think the answer was, it’s cyclical.
“We’ve had some really good runs, and we’ve had some really tough times. I honestly think that’s the way it is, because you can never be on top of every thing that’s going on out there, and you can certainly never guarantee that everyone is going to behave professionally, and that there will be no product failures, and that every time we implement another set of regulations we’ve got the problem fixed. It just isn’t going to work like that.
“So it’s about minimising risk. I think everything we’ve been doing in the first instance was to establish what a professional financial planner does, put appropriate rules and regulations around that, but work towards minimising risk.”
Re-engaging members
“Something that is always said about the FPA is how diverse the membership is, and was this a help or a hindrance? From my point of view, it is what it is today, and you have to work with it.
“So quite early on in the piece we segmented out membership into Certified Financial Planners; we completely re-framed associated financial planners – we had five categories in that area, so we made it one category – and we split our licensees into small and large. Those have been our key segments. And we’ve really focused on those key segments, leading to constitutional change, leading to the professional body journey, and reinforcing that.
“Getting that engagement and getting very positive feedback from members has been very good. Along with that is the professional framework.
“Let me reflect on the feedback from members on what we’ve done.
“We’ve set a clear direction for the FPA and financial planning, and making the bar high enough so that not everyone out there can make it. Those that do make it do the right thing, and again, minimise risk for clients.
“You’re now starting to hear Government, ASIC and Treasury talking about the Certified Financial Planner [CFP], it’s been in submissions, it’s recognised and that mark has a much higher profile. What we have to do is get that mark out in the community. That takes much longer, but there’s no doubt that we’ve made it very clear that the CFP designation is the Gold Standard; it’s a global mark; it means something, and when you want to look for trusted advice, look for that mark.
Giving the FPA teeth
“One of the comments that was made when I started was that the FPA had no teeth. And I think that’s beginning to change. Westpoint was very difficult for us because our system at the time was tested. I don’t think we’d ever had complaints as serious as those that we dealt with, with Westpoint, and it forced us say, ‘Does our system stack up?’
“And the changes we made were in response to much more serious issues that we’d probably never dealt with before.
“So when Storm came along, I think we were so much better prepared, and whilst I appreciate we are still in the midst of that process – and that some members are a little impatient; they would like that process truncated into one day between innocence and guilt – I just know what we did with Westpoint, and I know how we dealt with Storm.
“Westpoint proved successful, and we took action and we issued a number of sanctions as a result of that, so we demonstrated we could do that. And I think just applying the process along the way has been so much better.
“I think we’ve demonstrated that we’re a living, breathing professional body that will take action and we are different to a trade membership body.
“And that was a question I got asked a lot when I started: Are you a professional body or are you just a lobby group. And I think we’ve moved a long way down the track: I do not get asked that question any more.”
Storm Financial
“I live with Storm a lot, and continually question whether we could have done more before. And I don’t have an answer, in terms of we should have done thins, or we should have done that. We had no complaints to go with. We made it very public, what the process was, but I felt personally a little responsible, if you like, and still ask the question, what could we have done to prevent it?
“That’s a little dramatic, and I’m not sure the FPA could have done much more, because we’ve certainly looked very hard and we’ve done a lot of introspection around that. But I probably will always wonder, because of the huge damage, and I will always feel a little guilty in terms of the brand that sat on the front door that people relied on. That will always sit with me as a sort of a really sad, sad event, that was on my watch and that I’m not sure what we could have done better.
“We brought in FPA Confidential and various other things to try and improve the process. But you can only do what you can do at the time. But I suppose that will always be something for me that is a sense of concern.
“It’s why we’re moving to individual professionalism. I think Storm, the business, had the brand, the label and the connection, but it’s what the individuals were doing that might have created some change or some shift.
“We’re having that debate at the moment, about using the brand at a principal or dealer group level, and the extent to which individual financial planners need to sign individual commitments. And I suspect that individual commitment is far stronger than working under a corporate entity. It’s an individual that sits in front of a client; it’s an individual that signs up. And I think Storm has given us a really good example of how that failed. Very few of their financial planners were members of the FPA; Storm was, and there was a big gap.
“That’s given us some really good things to work on in terms of learning from the experience and minimising the risk from these sorts of thing from occurring again.”
Implementing reform
“I think the next phase is about the implementation of the reform agenda. We pretty much turned everything on its head, we’ve lifted every stone and we’ve made the changes we needed to. Publicly, internally, because we had to, because it was part of the process – for whatever reason, it was the right time to do what we did and we made the most of the timing of it.
“The next phase is about embedding what we said we would do, what the Government has put on the agenda, what the PJC has put on the agenda, what Cooper is looking at, and moving it forward.
“What’s important in the next phase is making sure we don’t go back to the ‘good old days’, just because markets return. We have to have learned from the last couple of years, we have to have acknowledged our flaws and the things we were not doing perfectly, we also have to acknowledge that there were some good things happening, lots of professionals, good advice, etc – but let’s come out of it changed.
Personal performance
“My aim in all of this was to represent financial planners, and financial planners needed that public face, because the majority of financial planners have done, and will continue to, do the right thing, so it was always my objective to isolate the bad guys, the bad incidents, and demonstrate that actually they were an isolated exception – but to demonstrate, also, that we were not going to just live with it, we were going to do something about it.
“And we needed to make sure that the good guys were the good guys – right standards, right bar, right entry level – so the bad guys could be dealt wit hand moved on.
“This period of change needed leadership, and that’s a people thing. I have to say, though, that at all times I’ve had the absolutely unswerving support of the board. And two chars – Corinna and Julie – who have been part of the whole process. No one does this alone; we’ve talked about a good management team and a good team to deliver. Sometimes I’ve felt a bit like Kevin 24/7 – people have been really challenged here. It’s been hard work. We have been part of Kevin 24/7 because we’ve responded to so many parliamentary inquiries and reviews, never mind run a business.
“People here have worked really really hard, because they’ve believed in the vision. The board lives the vision, it lives the strategy and it has lived the reform, and it has provided unswerving support. And that’s a good thing –that helps you know that even though it’s going to be difficult and you’re not always going to make the tight decision…the big picture is right and you have the support of the board to head down that track.
“So it hasn’t been a lonely journey, by any stretch of the word, in any sense. And I have to say, also, there are a lot of members who have said, “you have our full support; we are sick and tired of having to talk about commissions, rightly or wrongly. Get on with it”. That’s part of the ‘It’s time’ piece, it’s part of getting people over the line who may not have got over the line, because no member wanted to be tagged with Westpoint or Storm or some of those issues when they were doing the right thing – so get on with this.
“It’s been character-building. There’s no doubt about that. And I have to say I have also learned to get a bit more thick-skinned than I might have been in the beginning. And that has come from the support of people like Julie, who have continued to say this is not personal, this is about the CEO of the FPA, it’s not about Jo-Anne Bloch.
“When your name is all over it, it’s sometimes a little hard to see that, but at the end of the day, I’ve understood why some of this has happened. I’ve wondered why, but you try to rationalise why it’s happened. And when you know it’s right thing to do then you also develop that courage and that capacity to see it through. And I think it’s been the right thing to do. What we’ve done has been the right thing to do.
“It does take its toll every now and then, though. And there have been some personal attacks, where you just wonder, but overall there’s also been some really strong support.”
Professional unity
“Think we still have some way to mature on that front. There are some really good examples in our industry where we know for a fact where different parties hate each other with a passion behind closed doors, but unite under a common purpose because the vision and the bigger picture is common, it’s understood and it’s supported.
Financial planners have some way to go in that evolution, and I do not know whether it’s because they are so passionate and so in the midst of it and have such strong views that they want to be heard, or if they feel like they’re under attack – I still haven’t really put my finger on why they like to have such pubic stoushes. I can’t understand it, but nevertheless I think sometimes we’ve been our own worst enemy. You know that I’ve tried to bring out a unity message, I’ve tried to bring the membership together under the banner of ‘the Value of Advice’.
“Maybe the issue is that some of the elephants have been so large and have not been dealt with properly that there is still too much debate. Perhaps having dealt with those elephants will help everyone unite and move forward. I am not really sure.
“But there is absolutely a tendency to debate through the public, which is just quite interesting.
Continuing the good work
“I am very confident that then board will continue on, because I am part of the bard and I have never done anything other than with the board. It’s completely board strategy, and I’m a fanatic on governance. And if it’s not board-driven, it’s member-driven, it’s a combination.
“I am absolutely 100 per cent certain that the board will continue its journey under Julie’s leadership, and nothing will change other than what has to change according to the environment it’s in.
“Far be it from me to tell the board why my successor might be, but I think my successor might be more focused on the certification/professionalism piece, than the policy/regulatory piece. They will need to be a strong advocate. They will certainly need to represent the membership, but I think having a very strong and deep understanding of a profession, of professional obligation, of our certification programs and of the importance of differentiating between professional financial planners and the others.
“I’m not getting a view that the term ‘financial planner’ is going to be enshrined, so it’s going to be incumbent upon us as a professional body to help consumers and others understand the difference between nthe good guys and the bad guys.
“So we’re going to need someone to maintain the professional body mantle. That’s going to be really critical.
“Clearly, that person is going to have to be able to advocate, differentiate and communicate the key messages around it, but I do not think there’s much more that can be reviewed. When it comes to regulation, policy, and so on, surely we must be at the end of the cycle.
“So my sense is that it will be about implementing some of the reforms, but also ensuring that it’s within the professional body framework – really taking us to the next level, and entrenching the role of the FPA as a professional body, the role of professional financial planers, enforcing our code …”
Quality, not quantity
I think quite frankly we may lose some members in the process. And the board has firmly set a focus on quality not quantity. So this is not going to be a numbers game, it’s going to be a quality game.
“And there’s no doubt that we have upset some segments of out membership, but that would be a minority. They’re also quite noisy. The silent majority, who are actually quite supportive, are not noisy. They are the silent majority.
“That said, a professional body advocates professionalism. And the [Financial Services Authority] said this in their latest report in December. It said the role of a profession and a professional body is to act in the public interest. It’s not to represent its members.
“Now, the maturity of our profession is around accepting that its representative body is a professional body, that has a code to enforce, it’s not an industry association, it’s not an advocacy group. It’s not just a voice for its membership. “That is something that we still have to get into the mindset of our membership – and I think it’s the minority. Those may choose a trade association in favour of the FPA. And the last time I said that publicly I got into trouble, but I firmly believe that.
“The board is of the view that we cannot keep talking about high standards, and be all things to all people. At some point in time, the rubber will hit the road. Our CFPs and our associate financial planners I think are on board with that. There’s going to be others at the edges, who are not going to want that, and the view is: so be it.
“One of the things I have learned in the last three and a half years is to discern between noise and genuine concern, and it took me a fair amount of time to work out what the difference between a minority view and a majority, systemic issue. “I’m becoming a bit of a dab hand at that – and hence, the reform agenda being the right thing to do reflects the majority view.
“I do hear from some quarters that the FPA doesn’t listen, but when you look at who’s saying that, it boils down to, usually, a commission, life insurance agenda.”
What will financial planning look like in the future?
I would hope that professional financial planners will be a distinct, easily identifiable group, whereby you will know that not only are they meeting with the requirements of Corporation Law, but they are acting with integrity and they are putting their clients first.
“And I hope that we will be able to identify this group and understand that we’re getting client-focused advice from this group. That the remuneration underpinning this group is of value, it’s transparent and it’s delivering real benefits.
“That’s the dilemma amongst all of this. We’re concerned that a consumer responds to a term, they don’t respond to a set of criteria. We thing the term comes first, and then when you see the term you know the criteria exist, because you would not be able to use that term. So what we have if we don’t have that term enshrined is, we have membership of the FPA. If it’s not membership of the FPA that’s fine with us, but it must be membership of another body.
“The next phase for us in identifying this group of professional financial planners, is making sure that are connected with some body that is holding them to account, over and above the requirements of the law.
“The two accounting bodies already represent 4500 financial planners; they have a god strong professional framework in place and they would meet with those criteria. This is not a play to monopolise the benefits for the FPA, but it is a ply to make sure a professional financial planner is easily identified, meets with those criteria and has those criteria enforced by a professional body.
“And the FSA in the UK in its December report, has moved away from a professional standards council, interestingly, in favour of accrediting professional bodies. They could have read our PJC submission – it’s quite unbelievable.
“How we get there in Australia is still up for grabs, because there is a view, from the PJC for example, that we need an over-arching, industry-based professional standards council. That’s one way to get to ensuring that all financial planners meet with professional standards. Another way is accrediting professional bodies; another way is identifying the term ‘financial planner’. Clearly we’d prefer the term and then the body.
“At the end of it all – however we get there, there’s got to be an easily identifiable group of professional financial planners who people can trust.”
