Advocates of professionalism are fond of drawing parallels between doctors and financial planners. And opponents of professionalism, or those resisting doing the hard work and restructuring that professionalisation requires, are just as fond of pointing out where the analogy falls down.
But Dr Adam Tucker, with a foot firmly in both camps, says comparisons between the professions are valid and, furthermore, give the financial planning industry clear insights into how to negotiate some of the issues it will face as it inches ever closer to becoming a profession.
Tucker completed his PhD and medical training before becoming a member of the Guidelines International Network, the director of evidence-based medicine at Monash Medical Centre and the director of the Beddoes Institute. The Beddoes Institute is better known to financial planners as the organisation that does the heavy lifting behind much of the market-leading research published by the Association of Financial Advisers (AFA).
It’s not immediately obvious how, and why, someone whose background is in medicine and the pharmaceutical industry found his way into financial services market research. But to Tucker it’s clear.
“Approximately 82,000 medical practitioners, 321,000 nurses, and 19,200 pharmacists enjoy a high status in the community while still working in partnership with the pharmaceutical industry,” he says.
“And this makes a good case study for the advice industry. I saw large parallels between the reforms that the healthcare sector had successfully traversed and those currently faced by the financial advice sector.
“Having worked for the Australian pharmaceutical industry, professional associations as well as healthcare professionals, I felt there was an opportunity to assist industry partners, licensees, dealer groups and professional planners to avoid the pitfalls of reform and more importantly, to grow using strategies that have been successful in healthcare.”
Tucker says the medical profession and financial planning share some structural similarities. For a start, the professions have the same basic three-tier structure.
“You’ve got the product producer – pharmaceutical companies or financial product manufacturers,” he says.
“Next you have the practitioner – either the doctor or financial planner who advise their ‘clients’. And finally, you have the patient or the consumer, both of whom find discerning the quality advice difficult.”
Tucker says both groups of practitioners are supported by professional bodies, registration by third parties, and regulators who are always watching.
“Many of the same challenges that financial planners face are common to those faced by health care professionals: competition; choosing to work for an institution or joining a practice; specialising or remaining a generalist; keeping up to date; managing a small business; marketing within a regulated environment; securing referrals; and struggling to get consumers to prioritise their physical and financial health above competing demands,” he says.
Tucker says the relationship between pharmaceutical companies and doctors has parallels in the relationship between financial product manufacturers and financial planners. These relationships, in both sectors, have been targeted by heavy regulatory change. But in healthcare, the industry and professionals have jointly led a charge to ensure that Australian consumers’ confidence in doctors’ unbiased and evidence-based advice is maintained.
“If doctors had become seen by consumers as simply a distribution channel for the pharmaceutical industry’s medicines, rather than as independent evidence-based practitioners, then healthcare wouldn’t have the status it now enjoys,” Tucker says.
Transparent and ethical
The healthcare industry has worked hard to ensure that its relationship with doctors is transparent and ethical. Tucker says it formed a voluntary self-regulation body, Medicines Australia, which maintains and administers the Medicines Australia Code of Conduct and works to educate the community about industry activities. He says the code complements the legislation and includes standards for appropriate advertising and behaviour of its sales staff, and sets the standard for ethical relationships between industry and healthcare professionals.
Medicines Australia is a strong advocate for transparency of payments and other “transfers of value” provided by industry to health consumer organisations and healthcare professionals. For example, under the Code, the provision to doctors of gifts, entertainment and lavish hospitality to doctors is banned. To fulfil their Transparency Reporting requirements, all companies publish on the Medicines Australia website the fees they have paid to doctors and the cost of hospitality at events.
Within these bounds, industry continues to develop innovative programs for professionals and consumers alike, and adds real value.
However, despite some clear parallels, there are also clear differences between healthcare and the advice sector.
While healthcare is structurally decades ahead of the financial sector, this doesn’t mean that lessons can’t be learnt.
“It’s the drivers of change, and what changes are required, that are important to understand,” Tucker says.
“Programs can be put in place to win the hearts and minds of consumers while the structural changes catch-up.
“Conflicts are present in both financial planning and medicine but there is a difference in the way that these are communicated in medicine. Transparency has to be genuine, and in healthcare you see this with conflict-of-interest statements made openly and often by practitioners who are supported by industry.”
Tucker says that Beddoes Institute data suggests that when transparency of product fees and revenue is disclosed by advisers, consumer confidence increases and a preference for product-based revenue is maintained.
“So it’s actually not really a question of whether advisers’ fees are built into the product or not, it’s all about transparency,” Tucker says.
Another lesson that can be learned from the medical profession is that “professional planners need to achieve better balance in their communications in order to gain consumer trust”, Tucker says.
He says social media and digital forums are a double-edged sword, because short pieces of communication may be taken as advice or advocacy without having the substance to be considered balanced. Planners have yet to understand their legal exposure in this domain, lessons long ago learnt by so-called “telemedicine” practitioners and industry marketers.
There is a need for education on best-practice in digital communication for advisers, especially where the subject is technical or health related,” Tucker says.
“Advisers are very enthusiastic about social media at the moment but I expect that over time this may settle down and social media will become a smaller component of a more sophisticated communication approach to consumers.”
Tucker says the best professional planners have good technical skills, engender trust, are good communicators and empathetic. However, one of their weaknesses is not systematically and routinely asking their clients for feedback, explaining their fees and articulating their value.
Performing client feedback surveys, audits, and benchmarking is not currently routinely undertaken by financial advisers. In medicine, audits are commonplace and this year they were among a number of compulsory activities to be undertaken by Australian GPs.
“Advisers often find the prospect of undertaking client surveys confronting but if done well the outcomes are always transformational,” Tucker says.
“They learn what their clients value, and that is often surprising.
“The advice sector is largely misunderstood by the consumer; most Australians don’t know what a professional planner does.”
Tucker says the financial planning profession is at risk of being defined to consumers by third parties. He says many education initiatives describe the role of professional planners, such as ASIC’s Money Smart website, which services 300,000 consumers each month, and this presents both a challenge and an opportunity. Medical education of the population is, by comparison, mature and well established.
“There is no room for trial and error in medicine,” Tucker says. “Health care professionals train now using simulation and make everyday decisions using evidence-based decision support tools and validated tests. Technology is used operationally to decrease human-error and to continually reduce the cost of service. In medicine, complexity of service is the basis for the fee charged.
“These and many other lessons have taught medical practitioners that professionalism is not only a degree and membership of a professional body. It is their approach to consumers and their dedication to providing a consistently valued and high-quality service that is the key.”