Australia’s next generation of financial planners have “a fairly big mountain ahead” in overcoming negative perceptions of the industry and boosting its professionalism, says Erin Shields of Dixon Advisory.
At just 25 years of age, Shields (pictured) became the first recipient of the Gwen Fletcher Memorial Award late last month. Named after a late pioneer of the Financial Planning Association (FPA), the prize is awarded to the highest achieving student in the association’s Certified Financial Planner (CFP) Certification Program.
While speaking with Professional Planner in a café near Dixon’s North Sydney office, Shields displays some of the outspoken nature for which the award’s namesake was so well known.
She explains how it feels to be starting out as a financial planner in Australia, at a time when the industry is going through considerable regulatory upheaval, punctuated by Senate Committee hearings, bad news stories about Commonwealth Financial Planning (CFPL) and a calls for a royal commission.
“I don’t think that it’s any more or less difficult [for financial planners now] given the industry is on the front pages of the paper at the moment…I think a lot of the damage was done through Storm [Financial] and those guys way back when,” Shields says.
She refers to the extensive news coverage and commentary garnered by the CFPL situation, which coincides with the Senate inquiry into the bank and the Australian Securities and Investment Commission (Commission), saying, “I think it’s important that we are aware and can respond to queries that clients have about it.”
Global financial crisis
As luck, or lack thereof, would have it, Shields’ career in financial services was unfolding at the same time and place as the GFC.
Having almost completed her Bachelors of Commerce at Sydney’s University of New South Wales, and unsure exactly which career direction to take, in 2008 she jumped on a plane to New York to embark on an internship with UBS.
“I arrived two weeks before the Lehman Brothers collapse,” Shields says with a wry smile.
She tells of being with a friend in New York one evening, just as the extent of Lehman’s dire financial straits were becoming apparent to its staff. Her friend’s partner, who worked with the firm, had phoned to tell them he was in the process of packing up his desk, along with his entire department.
Despite the corporate turmoil around her, Shields’ own role at UBS, where she was working as part of a team servicing ultra high net worth clients, was safe.
“I basically just started from the bottom with them,” she says, explaining that during this time with UBS she found her niche in financial planning, having never specifically considered it before.
She also thoroughly enjoyed living in the Big Apple: “I fell in love with it, and didn’t want to come home.”
While still completing her studies back in Sydney, for a period of time Shields became a long-distance commuter, spending all her Australian university holidays working with UBS in New York.
“I literally racked up about half a million frequent flyer points in six months – it was ridiculous,” she laughs.
United States versus Australia
Comparing her experience of the American model of financial services with the Australian variety, while describing them both as “very junior” Shields says, “Australia is definitely stronger in terms of regulations and reform – the US is very free range.”
For all the robustness of the Australian regulatory environment when viewed alongside the US, she says, “I think there’s still a very long way to go…reputation-wise.”
Though acknowledging the vital role regulation has to play, Shields believes it is only a single part of improving the industry.
“Regulation is definitely one way to try and professionalise the industry, but I don’t know that it’s always the right way.
“I think there’s always going to be the cowboys, unfortunately. It doesn’t matter how much you put in [in terms of regulation]…and they’re the ones who tarnish the reputation [of the industry].”
Education, education, education
Shields believes improved financial education, not only for financial planners but also their clients, are one of the keys to heading off circumstances such as the CFPL scandal and even the GFC.
“The big ticket [crises] like CBA, GFC et cetera, they all stem from a very high level, and it’s very easy to point the finger and say it’s a corporate or a government issue.”
She suggests that better financial literacy levels among the general public could mitigate such damage: “To be honest, I think a lot of these extreme amounts of damage could have been avoided or at least reduced.”
“At a really, really basic level, to be able to give people just fundamental ideas of [things like] the questions you should ask when someone’s giving you financial advice, what things you should be aware of around interest rates.”
