Planner blog: A line in the sand for the financial planning industry

I have closely followed the recent arguments for and against the proposed changes to the FOFA provisions.

While there are always some extreme opinions, I can see the arguments that are being presented by both sides.

However, there is a very significant point that is missing from the discussion. The community is completely “over” the financial planning industry and regardless of the merit of tinkering with the legislation, all many feel is that the self-interest of the financial planning industry is once again at the forefront.

Have those arguing for the “watering down” of the FOFA provisions not seen the falling percentage of people actually engaging with a financial planner over the past 5 years? Contrast this with the positive drivers for seeking financial advice that continue to mount: an ageing population; low interest rates; increasing superannuation; and the recovery of markets post the GFC. Can someone please join the dots for these people!

I strongly believe that the financial planning industry will win the battle with these changes but ultimately lose the war, as consumers continue to disengage from financial planners. I know it, plenty of other professionals know it, the media knows it and, most importantly, “trusted advisers” who are growing their relationships with clients know it.

The financial planning industry needs to start showing some leadership.  It has not done a good job on the whole in helping consumers and the perception in the community is that it has put itself before the interests of clients for too long. There are great financial planners out there who are totally focussed on their clients. Sadly these planners are tarred with the same brush.

It is time to move on, draw a line in the sand and let financial advice stand on its own two feet and not at the behest of financial product manufacturers.

If this is unpalatable or unsustainable then it is time for the majority of financial planners to reinvent themselves because their business model is not appealing to the vast majority in the community.

The reality is that the industry cannot continue as it is.

Footnote – My brother is a real estate agent. He takes great delight in telling me how financial planners are now lower on the rung than real estate agents when it comes to consumer straw polls. If that isn’t impetus for change, I don’t know what is!

By Ben Smythe, founder and principal, Smythe Financial Management