John Hewison has seen plenty of change in his industry since 1985. he explains to simon hoyle why the latest wave is merely the logical extension of a process that began almost two decades ago.
John Hewison pauses to find a word to describe the financial planning industry he entered in 1985. Twenty-five years is a long time, but it comes to him: “Cowboyish.”
“There was no need to have any formal financial planning-orientated qualifications,” he says. “One applied to the regulator, which was the NCSC [National Companies and Securities Commission] then, for a securities representative’s licence – so everyone was licensed individually – and I got that without any trouble, which surprised, me, and away you went.
“It was pretty wild and woolly, insurance-dominated, dominated by ex-insurance people. Massive commissions, not much product. There were two rollover products: BT and Wardley. It was learning on the job.”
Not being from an insurance background himself – he was a corporate consultant immediately before he set up as a full-time planner – Hewison viewed the industry slightly differently from many of his peers. “The thing that struck me when I first came out of corporate life was I could not understand why we were taking all the risks establishing the marketplace and the relationship, and then handing our client list over to a dealer group and a fund manager. It didn’t make any sense to me,” he says.
So right off the bat he resolved to do things differently, and establish a direct and inviolate relationship with his clients.
“So one of the advantages of having everything addressed, care of our offices, was that there was no dealer group and there was no fund manager owning our clients’ contact details,” he says.
After a few hiccups in the early years – including discovering that a business partner had stolen more than a million dollars from clients – Hewison set up his own business, with his own licence, in 1993. The company employed three people. Today it has 11 staff supporting six planners.
Hewison professes bemusement at some of the anxiety being expressed about the changes sweeping the industry. And he’s unsure why the Financial Planning Association (FPA) seems to cop the brunt of planner anger.
“Some of the stuff I’m reading about these days I smile about, because if we go back to the late 80s and into the 90s, when the FPA came into being, there was no education,” he says.
“[The FPA have] driven the whole increase in the education standards and developing education programs, and eventually then developing other education institutions into delivering the programs; they’ve driven professional standards; they’re involved at an international level as a leadership group driving international standards; and I just think they’ve done an absolutely sensational job.”
Hewison says the lack of entry qualifications for the industry is a real issue that needs to be addressed. He says,“if the general public really understood the lack of standard required by [RG146], they’d faint”.
“It’s just a disgrace,” he says. “And the FPA is pushing that barrow with ASIC, trying to get them to increase the standard.
“And I think the standard will naturally get increased. When I did my accounting – when I was a mere boy – you didn’t go to university, you went and got a job and you did it part-time. It’s exactly the same as the evolution of financial planning; and now we’ve got a degree-based entry point, we’re really going to be standing up and [being] counted. And I believe that’s what the general public expect; financial planning is a complex and important professional service, and people need to be properly educated.”
Hewison maintains that no one who has worked in planning for any length of time can reasonably claim to be surprised about what’s happening today.
“I remember when the Diploma of Financial Planning was first introduced, in 1991 or thereabouts, the writing was on the wall right then and there, and anyone who didn’t see it was just stupid,” he says.