Sandra Bowley says a planner’s obligation to put clients’ interests first means industry superannuation funds should no longer be treated – nor treat planners – as the “enemy”.
As a member of the Financial Planning Association of Australia (FPA), and a Certified Financial Planner (CFP), I am bound by the association’s Code of Ethics, in which the first point states: client first.
The Code says placing the client’s interest first is the hallmark of professionalism, requiring the financial planning professional to act honestly and not place personal gain or advantage before the client’s interests.
The Code also addresses integrity, objectivity, fairness, professionalism, competence, confidentiality and diligence.
“Client first” is a very simple yet powerful statement, and I object to comments made by the chair of MediaSuper, Gerard Noonan, in a recent Roundtable article (Professional Planner, February 2011), which suggests that financial advisers do not act in the best interests of their clients.
In that article, Noonan claimed that none of his fund’s 125,000 members were in the fund “because a financial adviser has said, ‘You should be in MediaSuper because it’s a really good fund, because it makes X per cent a year, and it’s really cheap’ ”.
He claims that not one financial adviser has done this, and his comments go on to suggest that financial planning could be improved if all advice were required to be given “in the interest of individual people”.
I feel that Noonan’s comments suggest that financial planners are taking everyone they come across out of industry funds, and this is simply not the case.
I have dealt with several of Noonan’s members. Having looked at their individual circumstances, I have recommended that they stay in the fund – perhaps switch investment options within the fund, if their risk profiling has not been done correctly – but as to the fund itself, my recommendation to them was to retain it, as this was in the client’s best interests.
In other cases I have recommended that members increase the amount of money they put in, by way of strategies such as salary sacrifice.
I recently had a client who was a member of a local government scheme, and he wanted to increase his insurance. We increased his insurance to $1 million in his industry fund. I did as much as I could through his industry fund, because in that case it was in his best interest to do it that way.
Putting the client first is the first hallmark of professionalism. Financial planners have to justify their recommendations and I always provide financial advice that is in my client’s best interests.
The Financial Planning Association’s Code of Ethics
Principle 1: Client First
Place the client’s interests first.
Placing the client’s interests first is a hallmark of professionalism, requiring the financial planner to act honestly and not place personal and/or employer gain or advantage before the client’s interests.
Principle 2: Integrity
Provide professional services with integrity.
Integrity requires honesty and candour in all professional matters. Financial planners are placed in positions of trust by clients, and the ultimate source of that trust is the financial planner’s personal integrity. Allowance can be made for legitimate differences of opinion, but integrity cannot co-exist with deceit or subordination of one’s principles. Integrity requires the financial planner to observe both the letter and the spirit of the Code of Ethics.
Principle 3: Objectivity
Provide professional services objectively.
Objectivity requires intellectual honesty and impartiality. Regardless of the services delivered or the capacity in which a financial planner functions, objectivity requires financial planners to ensure the integrity of their work, manage conflicts and exercise sound professional judgment.
Principle 4: Fairness
Be fair and reasonable in all professional relationships. Disclose and manage conflicts of interest.
Fairness requires providing clients what they are due, owed or should expect from a professional relationship, and includes honesty and disclosure of material conflicts of interest. It involves managing one’s own feelings, prejudices and desires to achieve a proper balance of interests. Fairness is treating others in the same manner that you would want to be treated.
Principle 5: Professionalism
Act in a manner that demonstrates exemplary professional conduct.
Professionalism requires behaving with dignity and showing respect and courtesy to clients, fellow professionals, and others in business-related activities, and complying with appropriate rules, regulations and professional requirements. Professionalism requires the financial planner, individually and in cooperation with peers, to enhance and maintain the profession’s public image and its ability to serve the public interest.
Principle 6: Competence
Maintain the abilities, skills and knowledge necessary to provide professional services competently.
Competence requires attaining and maintaining an adequate level of knowledge, skills and abilities in the provision of professional services. Competence also includes the wisdom to recognise one’s own limitations and when consultation with other professionals is appropriate or referral to other professionals necessary. Competence requires the financial planner to make a continuing commitment to learning and professional improvement.
Principle 7: Confidentiality
Protect the confidentiality of all client information.
Confidentiality requires client information to be protected and maintained in such a manner that allows access only to those who are authorised. A relationship of trust and confidence with the client can only be built on the understanding that the client’s information will not be disclosed inappropriately.
Principle 8: Diligence
Provide professional services diligently.
Diligence requires fulfilling professional commitments in a timely and thorough manner, and taking due care in planning, supervising and delivering professional services.
Sandra Bowley is principal of SBFP, an authorised representative of AMP Financial Planning.
