So far, the FoFA reform process has taken nearly as long as the Second World War. Brad Fox says it’s time for industry players to put their differences aside and work together to achieve the best possible outcomes for everyone.
Throughout history there are countless events that exemplify the saying, “United we stand, divided we fall.” It has been used frequently in sport, often in battle, and of course in politics. The saying points to the desire to win, to see something through, and to maintain a stand for what you believe in – but to do it by rallying with those others that share the same belief.
The irony of this is that in each of the contexts – sport, battle and politics – each side would say they are fighting for the “right” thing. And certainly in the context of politics, each side will proclaim to be doing it for “the common good”.
It raises the question then: What is “the common good”? It is a notion that has been written about since the time of Aristotle, Plato and Cicero more than 2000 years ago. In modern times, it generally centres on two aspects: first, a set of conditions that are equally to everyone’s advantage; and second, relatively thorough and ready access for individuals to their own fulfilment.
In the Future of Financial Advice (FoFA) debate – which now resembles a battle – it is fair to ask the associations that represent advisers/planners whether they are indeed fighting for an outcome that is for the common good. It’s a question that the leadership of the Association of Financial Advisers (AFA) has asked of itself numerous times.
Absurd
Reflecting upon this, I noted that I was in my thirties when the FoFA reform process started, and the clock is ticking its way now to my 45th birthday. So far, the FoFA process has taken nearly as long as the Second World War. Its cost is in the hundreds of millions of dollars and absurdly, it is still not resolved.
It seems difficult to understand that in a country where the financial system stood up so well to the GFC, and is generally acknowledged around the world for its integrity and stability, that “fixing” the advice market could take so long – but then again, perhaps it has taken so long because improving an already strong system is more difficult than fixing a basket case.
With the announcement by Senator Cormann of a “pause” in the FoFA amendment regulations, the mass media has taken the cue to go silent on the debate. It has given all interested parties the opportunity to re-examine their policy position, their beliefs, their strategy – and let’s hope, their view of what represents the common good.
The AFA is 67 years old, making us the most experienced professional body specialising in financial advice. The AFA and its members have survived and thrived through every major change to financial markets in Australia since 1946. As an example, in the nineties it was the AFA that fought and won the battle for workers to have the power to choose their superannuation fund. It was a hard-fought battle against the union-backed industry funds and included the need to rally at the steps of Parliament House. I raise this because it was an outcome that was achieved in the name of the common good.
Committed
So, with a focus on where the amendments to FoFA now sit, the AFA remains committed to achieving an outcome that improves the probability that more Australians will seek personal financial advice, and that the advice will be professional, appropriate and of significant value. Put simply, we are seeking an outcome that can achieve great advice for more Australians. This, we believe, is for the common good.
The evidence is clear that Australians who receive financial advice are financially better prepared for retirement, have more appropriate
levels of personal life insurance, and have greater emotional comfort that they are in control of their financial position.
The amendments proposed to FoFA support better access to and affordability of advice – both consistent with achieving the common good. So, why have the views of those who oppose these changes been accepted and repeated so loudly by mainstream media? And just as importantly, what can we do about it?
First, let me say very clearly that Industry Super Australia (ISA) has led the charge very effectively against the FoFA amendments, but it has done so in a way that the AFA cannot support. We will not use misleading and clearly false statements to achieve our aims.
Aspersions
ISA is very well funded and resourced, and all observers should remember that it is primarily a product provider. And to the extent that it provides advice, it is primarily general advice or scaled advice relating to its own products. This makes it vertically integrated; and the aspersions it casts on the financial advice market over conflicts of interest are exaggerated within its own structure.
If the advice market is to be effective in communicating its views on the legislative settings that will achieve the common good, then the advice market must stand together with a common voice. Associations, licensees and individual advisers all appear to agree, in one way or another, that we need improved educational standards, increased professionalism and efficient regulation that protect the interests of
all parties in the advice process.
Similarly, we agree that the regulatory framework should help more people to get advice – advice that they can rely on, and that they can afford.
