Financial planners can be a feisty bunch. I’ve never met one who doesn’t have a strong opinion (and there are some who have more than one opinion) on a wide range of subjects. Talking to some planners, I’m reminded of George Bush Snr: “I have opinions of my own, strong opinions, but I don’t always agree with them.”
It’s what makes the industry as vibrant and colourful as it is, and it’s why writing about its participants has generally been an entertaining way to spend the past 25 years.
But planners’ fierce independence – a word I’ll use despite the legal niceties of the definition under s923A of the Corporations Act – is also, paradoxically, the industry’s Achilles heel. Getting a strong consensus on any issue is difficult. Ask 10 planners what they think and you’ll get 10 different answers. The Government knows this. There’s no single body that represents the interests of the industry at governmental level. Nor should there be.
Most recently, the FPA achieved something approaching unanimous support when it received 94 per cent of votes in favour of its membership restructuring. I’m struggling to think of other occasions when support (or opposition) for something has been completely overwhelming.
But as politicians are fond of saying, the things that unite the industry continue to be greater than the things that divide it. And even if there’s a wide diversity of opinions and ideas about what’s good or bad for the development of the financial planning industry, it continues to develop and to evolve. There must be some fundamental issues on which the majority of the industry’s participants agree, in aggregate; otherwise it wouldn’t be heading in any direction at all.
Central to how the industry develops is how large licensees respond to the Future of Financial Advice (FoFA) proposals, and to other regulatory and governance issues that come up. There are two elements to FoFA. In fact, there are two elements to any legislation or regulation. There is the black-letter meaning of the law or the regulation; and there is its spirit, or intent.
That’s an issue that has been made clear by the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten. There are certain things that the Government, through FoFA, intends explicitly to outlaw. But there are also what you might call “mindsets” or “behaviours” that it also intends to abolish. And while it can’t develop legislation or regulations to address each and every one of those – because there will be some that no one has even yet thought of – it’s brought in a kind of catch-all provision. It calls this the “best interest” test.
Shorten has pointed out that even if a particular action, structure or behaviour by a financial planner – either an individual or a business – isn’t addressed directly in FoFA, the best interest test is the mechanism that will be used to prevent it. It is a device by which the integrity of the spirit or intent of FoFA will be preserved.
Right now, dealer groups across the country are hatching their strategic responses to FoFA. We’ve started to see some of them announced publicly, and one has to say: so far, so good.
But you can bet your bottom dollar that the diversity of opinion and free thinking that characterises this industry will lead to some responses to FoFA that the Government will think overstep the mark, and which compromise the integrity of its reform package.
If you want some certainty about what will happen in the future around FoFA, then you can be sure that the Government won’t allow its reforms to be diluted or circumvented or trampled over.
What happens when or if we get a change of government? Well, that’s a different matter altogether.
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Professional Planner is very pleased to be publishing this month CoreData’s analysis of dealer groups and how those groups are regarded by their own planners. The cover story in this edition presents the results of that work, and features interviews with the heads of the top five placegetters. It also features an explanation of how the analysis was conducted, written by Kristen Turnbull, head of advice, wealth & super for CoreData. Some of you might remember Kristen by her maiden name of Paech: she was a senior journalist on Professional Planner before joining CoreData.
The interviews with the dealer group heads are enlightening, as they give an insight into the challenges that these businesses have faced over recent months, and give some clues as to how they’ll be responding to challenges in future. As I said earlier, the things that unite are often greater than the things that divide; it’s interesting to see the commonality of the issues that these groups are currently grappling with.
These issues will also be front and centre in early June, when Professional Planner stages its inaugural Dealer Group Summit. This is a forum for the top management of the country’s leading dealer groups to come together to discuss the future of their organisations and how they will deal with the challenges of a rapidly changing world.
We’re necessarily keeping this event relatively small – but if the head of your own dealer group hasn’t registered to attend, give them a nudge.
Simon Hoyle
simon.hoyle@conexusfinancial.com.au
