Whiteley says there is clearly a need for financial planning to be available to a much wider cross-section of the community, but he says the industry funds movement has a particular view on how advice should be regulated within a system that is compulsory for its participants, and which already has “advice” embedded in it (for example, in the decision to save for retirement; the amount that should be saved; the existence of a default investment option; and the provision of default insurance cover).
“Industry funds for many years were portrayed as being ‘anti-advice’, and I think that portrayal never had credibility, and isn’t a comment that’s made particularly regularly now,” he says.
“The view we’ve always taken is that of course financial advice is of value to people, but we don’t have a one-size-fits- all mentality towards it. We recognise that people want different types of advice, at different times in their lives.
“In fact, unless I’ve misread the latest research out of Investment Trends, more people want single-issue ‘transactional’ advice than they want ongoing, relationship-based advice. That’s certainly the way it was characterised in the article.
“And that’s our view. Our view is that financial advice should be what consumers want; it should not be what an industry, and the financial planning industry in particular, wants to deliver. So we see advice as being multi-faceted.
“But we’ve also been very, very clear and we’ve run a campaign for 25 years, not just for the last couple, that says advice should be unbiased, and the financial planning industry should become a profession.”
Whiteley supports the standards that the FPA has put in place for its members.
“I think that’s welcome and that’s sensible,” he says.
“We have a difference of opinion on some of what the FPA is proposing, compared to what we’ve advocated and, to a lesser extent, to what the Government is proposing. But as I’ve said, I think our view has remained very, very clear: for the advice industry to become what it should be, which is a profession, you’ve got to get rid of the conflicts of interest. And there’s no ifs or buts about that.”
But Rantall takes issue with Whiteley’s claims to independence when it comes to calls to abolish conflicts of interest.
“All due respect to David’s position, I’m not so sure David is in a position to take the independent view around that,” Rantall says.
“ISN is there to promote the industry fund movement, which I have absolutely no issue with, but it should not be at the expense of other financial planners, who are not part of the industry super fund network, or even the retail super fund network for that matter.
“What this is really all about is calling a spade a spade. We’re a professional association, representing professional financial planners in this country, many of whom are operating in the more independent space, if you like, and many who are part of an industry super fund – and they’re all our members.
“The issue here is that the Industry Superannuation Net- work is part of Industry Superannuation Holdings Pty Ltd, as I understand it, and there are three component parts of its function. One is a bank, ME bank; one is a funds management company; and the other is a financial planning business. And that’s all well and good and again, we have no issues with that. And it turned over $265 million in 2010.
“The fact is, it’s a large banking, wealth management conglomerate, and therefore when it’s commenting about policy, and it’s commenting about advice, and it’s commenting about funds management, we just need to be very clear where those comments are coming from. And it’s normal and it’s understood that they would come from a commercial point of view, rather than a consumer advocacy point of view.”
Rantall says ISN is pushing the interests of industry funds, and industry fund members, in all of its advertising and its policy positions.
“Before the ink has dried on FoFA, where commissions have been banned, ISN has mounted another consumer advertising campaign, focused once again on cost, saying that consumers should not go and see a financial planner if they are going to pay an ongoing fee,” he says.
“And the motive for that campaign is to make sure as many people as possible go to see an industry super fund financial planner.
“And that’s fine as well, but you can’t say go and see an industry fund financial planner and you’ll receive unconflicted advice, because that’s not true.
“There may not necessarily be anything wrong with that, and in terms of industry super funds, we well know that much of the advice there is cross-subsidised by the overall member income, and there may not be necessarily anything wrong with that, either, as long as it’s disclosed to members. But you can’t then run an anti-adviser campaign and claim that you’re competing in a conflict-free environment, because that’s not the case.”
Whiteley says ISN is not doing anything it should not and cannot do, nor anything that any other financial institu- tion could not also do.
“To summarise, what you’ve said, it’s OK for us to run ads,” he says.
“It’s OK for us to run ads promoting industry super funds, and promoting advice in industry funds. What we’re doing, you’re saying it’s OK for us to do. I do not know why, then, we’re arguing over something that we both agree we can perfectly legitimately do.”
