The past year has seen a flurry of government reports, ministerial announcements and even legislative change in the world of financial planning. If you can climb over the wall of noise that this generates, wade through the sea of newsprint dedicated to dissecting and (often) misinforming you about these changes, and navigate your way through all the detail – then, if you’re very lucky, you’ll make it to the safe and quiet shores of tomorrow.
At least this is the promise we keep making to ourselves – that things will always improve; if we can just make it over this next regulatory hurdle, things will be brighter on the other side. Some even suggest that if we can just make enough noise, then it will all go away. The bad news is that this won’t go away. Yes, the policy might change slightly, or possibly go away for a little while. But the reality is that the financial services sector is now the largest contributor to GDP; and Government intervention will not go away completely,
given the importance of the superannuation and investment industry to economic performance and the national interest. The Government also believes there’s something slightly risky about financial advice, and so they’re always tinkering with it – or in some cases blasting away.
These “risky issues” are not the bogeyman of “commissions” or institutional licensees or even product relationships. It seems to be the niggling suspicion, the “perception”, that the “client’s interests” are not always put ahead of “self interest”. This misperception has been a driving influence in almost all the reform programs over the past few years. This is the real challenge that the Future of Financial Advice (FoFA) reforms represent. The proposals go too far – the pendulum has swung too hard and we need to fight tooth and nail to ensure that consumers and an entire profession are not harmed by misperception. Success of the FoFA reform program won’t be measured by the detailed nuance of a fiduciary obligation cast in law, or the technical application of product-related regulation, but by the far more fundamental issue of how the financial planning profession is perceived by the public and by politicians.
The question is, how do we change the current perception? How do we win their hearts and minds and gain genuine professional respect for the extraordinary work that financial planners do? I don’t think we can do it by yelling loudly, acting hysterically or by offering non-constructive ultimatums to a government that doesn’t consider financial planners to be a voting constituent of interest. In fact we’ve done the maths on this as part of our election planning and our data shows that only 10 per cent of FPA members reside in marginal seats held by Labor. Some people have pointed to the work of the mining lobby groups as a successful tactic that should be employed in financial planning. Leaving aside the impossibility of building the reported $100 million advertising budget that the mining companies had available, the point of their campaign was to deliberately strike fear into the Government about their own voting constituents.
The consequence might seem like a victory for the mining industry; but the reality is, they still have a new multi-billion-dollar tax, and now also a Government with a long memory. It seems to me that the strategy for the financial planning profession should be the opposite. Our goal shouldn’t be to instil fear but to instil confidence and trust in the future of financial planning and the central role it plays in delivering a financially successful future for Australians and their government. We want to deal with the issues of perception and practice once and for all, so that financial planning is not the whipping boy every time a new story is needed. We will fight on those issues that are detrimental to consumers and to the integrity of your professional future.
But getting to an effective outcome will take considered dialogue and strong lobbying, driven by deep thinking about the issues and a constructive approach to genuine change that recognises the battle is as much about changing perception as about changing the law. The goal through all of this is to ensure a strong professional future; one that rewards you as long as you choose to work within it – a profession that has gained government respect and community trust.