The future of financial advice isn’t just about a series of regulatory reforms. It’s also about the financial planners who are coming through the ranks and defining the profession on their own terms. Simon Hoyle reports. A submission to the Ripoll inquiry by Quantum Financial Services didn’t pull any punches. It painted a picture of an industry dominated by powerful vested interests and riddled with conflicts. And the submission was clear about what should be done. The Quantum submission wasn’t alone in this respect. What set it apart from many of the others was that it provided the perspective of a 34-year-old, who sees a long future for herself in the financial planning industry, and who is passionate about it being perceived as a profession in that time. Claire Mackay and her brother, Tim, run the business founded by their father, Bill, more than a decade-and-a-half ago. But Mackay’s exposure to the financial planning industry first happened while she was still at school.
“I remember Dad starting his business – filling out the forms on the dining table, dealing with ASIC – and as a student at school volunteering to do the typing,” Mackay says. But there was never any suggestion that Mackay Snr would just open the doors of his business to his children. They first had to prove themselves. Mackay says her father insisted that they acquire “the skills and the qualifications and experience – experience in big business” to contribute constructively to the venture. “So that’s what I did,” she says. “Seven years of experience in an accounting firm and a bank meant that when I got to the point where I wanted to join the business, Dad eventually said, ‘I think you are ready’.” Mackay says gaining experience of big business was an important part of her background. “Unless you have worked in a big business you don’t understand how they work,” she says. “Financial services is dominated by big institutions.
You have exposure to different ways of doing things…but also you gain exposure to best of breed. “It’s one of those things, where you get exposed to great leaders and great thinkers, as well. Tim and I have both brought, from our backgrounds, ways of doing things. Our approach has always been, just because we have always done it this way, that’s not justification to keep doing it that way.” The philosophy of not accepting something should be done a certain way, just because it always has been done that way, underpins much of how Mackay approaches things. “When the Ripoll inquiry was announced, we sat down, and it was my father who said this is an opportunity to really shape our profession for future generations,” Mackay says. “My father had implemented his retirement and succession plan by that stage, but we were young. And if you want to change something, you have to be prepared to put the work in and put the effort in.
Terrible things had happened and yes, this was an opportunity to have a say and improve our profession. “It’s a bit like the way we do business: just because that’s the way we do it isn’t justification for it continuing to be the way it should be done. We see that as younger planners we have 30 years ahead of us in this business. Our clients are asking for this. It’s not like we’re living in a bubble – this is something that is good for our business. “This is a function of our upbringing: if you believe in something and are passionate, then having the courage to say that is not something to shy away from. The key thing is, it’s a bit daunting. Who are we? We’re not a big bank. But what we’ve been overwhelmed by is the support we have received. “We understand that there are people who do not agree with us…so I can understand their perspective as well. “At first it was lonely. But now, a lot of other planners have contacted us, and our clients have contacted us.”
Mackay says speaking up has not hurt the business. In fact, Quantum has surpassed its growth plans. “Business growth is not something we are struggling with,” she says. “We review it each year, but we didn’t expect in such difficult times to have the growth [we have had].” Mackay has faith in the future of financial planning and its ability to be seen and trusted as a profession. “When you get past the negative associations, currently, I think it’s a noble profession, like a lawyer or a doctor, because you are helping your clients,” she says. “I’m proud to be a financial planner, because I can see the value in it.” To the extent that Mackay has concerns about the impact of the FoFA reforms, it’s not because the reforms are misguided but because they do not go far enough. She says she supports reforms that will increase professionalism, remove conflicts of interest and improve public trust. “We have some concerns about some of the reforms, because they do not go far enough – but maybe that’s the enthusiasm of youth,” Mackay says. “In times of economic uncertainty, people are looking for someone to trust, to help them in ensuring their economic welfare.”
She says the FoFA changes are “not just good for consumers, and not just good for businesses like ours, but good for the whole profession”. Besides, she says, we’ve been somewhere like this before, a decade ago, when the Financial Services Reform Act came into effect. There were predictions of doom then, too. The industry not only survived, but emerged stronger. “People did leave the industry; I acknowledge that,” she says. “But most did not. We get reform fatigue, but the big picture is that we are in an incredibly honoured position and have great responsibility to our clients. “With these duties come burdens, and I do not think it’s unreasonable that planners justify to their clients the value they bring to them. “I can understand why some older advisers who are trying to sell their busi nesses are resisting this; but you have got to see the bigger picture.” Mackay says a critical part of winning the trust of clients is to make sure that clients’ expectations are met.
