Jane Campbell knows only too well how other professionals view financial planners – specifically, how lawyers view them. As the principal of Aeran, a self-licensed financial planning business established in July this year, Campbell specialises in helping the recipients of accident compensation payments.

It is an area of the law that fascinated her as a first-year law student at Melbourne University; was nurtured while working as a lawyer for insurance companies; and came into full focus during a period living and working in the United States in the structured settlements business.

But to provide financial planning services to injured people, Campbell had to become a financial planner. In addition to being a qualified lawyer, she is a Certified Financial Planner (CFP); and for referrals, she relies on plaintiff lawyers – those who represent accident victims seeking compensation.

Campbell says the legal profession’s opinion of financial planning is not high, and that was a major reason she believed her business had to be truly and demonstrably independent.

She says some of the attitudes towards financial planning are “justified, based on the unfortunate structure of financial planning to date – or the industry to date”.

“It was an industry, it was poorly structured, and the lawyers could see that,” she says.

“And so they’ve always been very suspicious, and still are. I’ve tried to say that not everybody is like that. But it’s been hard, and that’s why I am so pleased to see all the reforms that are happening now and the stance that the [Financial Planning Association] took in being a professional body. All that has helped me.

“I’m still educating the lawyers that the planning profession is doing everything it can to be professional.”

Campbell left the AMP-owned licensee ipac securities in January this year, and after a six-month non-compete period set up her own business.

“It became increasingly evident to me that the lawyers, upon whom I rely for all my referrals, can see [and] are getting closer to the financial planning profession,” she says.

“To be really precise, the big plaintiff law firms are increasingly involved in suing financial planners. The plaintiff law firms who I’ve always worked with have been asked to be involved in the CBA remediation, the Open Advice Review program. I know those lawyers are having a very close look at financial planning and I felt with their increased knowledge of the way it all works, how could I not be independent?”

A foot in both camps

With a foot in both the legal and financial planning camps, Campbell bridges the gap between when an individual receives a compensation payment, and the rest of their lives. She first encountered this issue while doing work experience with FAI Insurance in Melbourne.

“I got the job on the basis that I said, ‘Oh yeah, I’ve done tort law’ – you know, first-year torts, and therefore I knew everything there was to know about personal injury,” she says.

“They threw me in the deep end and gave me certain letters of the alphabet and all the clients with those surnames, and my job was to get people back to work.

“I just loved it. I nearly didn’t take [my planned] trip overseas. It was just so much more interesting [than I expected], because every person is a story.

“There was such a strong view within the insurance community that people were frauds and cheats and malingerers…but I saw the impact of people being taken off workers’ comp, which is that there were lots of suicides, and it really hit home what it meant for these people.”

In the end, Campbell’s European sojourn lasted only three months and she came back to FAI. Her experience meant that when she was looking for a job as an articled clerk she landed work as an insurance litigator, which focused on defending personal injury claims – acting for insurance companies against claimants.

“I very quickly realised that I wanted to help the plaintiffs,” Campbell says.

“I suppose I justified it for a while on the basis that if I am here, I can help make good, fair decisions. But in the end I didn’t think the system treated people very well.

“And I was fascinated – from then until today – by what happens when the legal case is over. The lawyers do their job, they apply the law, come up with a lump sum, and the person is spat out of the system at the end, with a cheque, stumbling into their future.”

Structured settlements

When Campbell heard a visiting US lawyer talking about the idea of structured settlements – essentially, providing an injured person with a lifelong income, in preference to a single lump-sum payment – she decided to check it out and spent a year working in Ohio.

“I would observe the defendants trying to settle the case, the plaintiffs looking for financial security, and the structured settlement brokers would put together a package of annuities to meet the person’s needs for life,” she says.

“They also had people called ‘life care planners’, who would look at someone’s medical needs for life, and we would map the annuities to the needs. There was a lot of competition in the annuities market, and a lot of appetite for the life companies to discount their annuities.”

Returning to Australia in 1997, to NSW, lump sums for motor vehicle accidents were a political hot potato. Insurers were complaining about the size of lump sum compensation payments (and blaming the lawyers), and started to tighten up underwriting.

The then head of the Motor Accidents Authority (MAA), David Bowen, who is now head of the National Disability Insurance Scheme (NDIS), believed that injured people in NSW needed an income stream to pay for their care.

“The MAA supported me to lobby to change the tax law in Australia to make annuities tax-free for accident victims,” Campbell says.

“They said, ‘We want these structured settlements in Australia, so can you do that? And we think it should take you about six months.’”

It took six years.

“It’s a funny ending to that story,” Campbell says.

“The law is there. And I’ve never once recommended [annuities] to anybody. They have never been used. All this work I did with the government, pushing for annuities. They spoke to me several times and said, ‘What’s going on [with] these annuities – we changed the law for you, and nobody’s doing them.’ I said, ‘Well, in the real world, people don’t want them.’”

Campbell says that during the time she was lobbying for the changes, “superannuation law evolved in Australia to the point where we had allocated pensions, which are a far superior, in my view, solution”.

“There are a few reasons,” she says.

“Number one: they are flexible – you can change the payments up or down. Number two: you can take lump sums. Number three: you can be invested in the market – better returns. And number four: if you die, the money will be part of your estate. It’s just like your super fund. If you die, it’s your money.”

Clients effectively ‘retirees’

Campbell says that her clients are, effectively, “retirees” – even though they may be as young as 10 years old when they retire.

“I use that word ‘retire’. There’s a special rule in superannuation. We’ve got caps to what you can put into super but there’s an exclusion to the caps that says if the money you are putting into super comes from personal injury, there is no cap,” she says.

“If somebody gets $5 million, they put it into super. There’s a special rule about getting it in. Once you’re in, the normal super rules apply, which is usually [that] you can’t access your super until you’re 65. But one of the conditions of release from super is ‘permanent incapacity’.

“So my 10-year-old can put it all in; I can then say he’s got a permanent incapacity; we can roll the super over to an allocated pension; and he has a flexible income stream for life. It’s perfect.

“It’s best practice in the world, because I know very well what they do in America and in England, and we’ve got the best solution in the world.”

But Campbell says all of this is under threat from plans to remove the right of individuals to sue for lump-sum compensation, and to introduce pure no-fault, state-administered schemes instead. It’s a move that Campbell opposes, and against which she is working with the Australian Lawyers Alliance (formerly the Australian Plaintiff Lawyers Association).

“We’re trying to say to the federal government, what are you doing?” she says.

“You’re moving people from the private sector where we’ve got this beautiful solution for effectively managing lump-sum compensation. We’ve got fantastic super systems and great competition, and flexible income streams that protect people; and instead you want to force everyone into a government bureaucracy.

“For a start, you can’t afford it. You’re setting up or expanding all these bureaucracies around the country. People don’t want it; they want choice, independence and self-determination. What are you doing?

“There are just a few very influential people in Australia who do not like lump-sum compensation. They like the New Zealand scheme, where nobody can sue or receive lump-sum compensation. That’s the model that we’re actually currently moving towards.

“And I don’t think that’s a good model for Australia. We should not be removing legal rights and condemning people to a lifetime of bureaucracy.”

Care on a no-fault basis

Campbell says that although she is concerned about the situation for people who do have personal injury rights and entitlements, “I fully support the introduction of the NDIS as a broad-based and improved safety net”.

“There’s a statistic that 45 per cent of Australians with a disability live in poverty,” she says.

“And that’s terrible on an OECD average. We’re one of the worst countries in the world for people with a disability.

“The Productivity Commission did a report in 2011, which looked at disability in Australia. They said it’s terrible and what we need is to give people care.

“However, they said, well, we can’t pay for everyone, it’s all going to be very expensive, so we need an NIIS – a National Injury Insurance Scheme – which almost nobody has heard of.

“The vision is that state government compensation will eventually fold into the NDIS and we will end up with a New Zealand-style, pure no-fault scheme, whereby the taxpayers pay for everyone.

“We’re trying to say that the legal system and the private sector do a pretty good job of looking after people who get injured as a result of negligence. People take out insurance. People get injured. They sue. There’s insurance that pays. They put their lump-sum compensation into super. It’s very competitive and the fees are low. People have choices.

“Why are you forcing everyone into something that you cannot afford?”.

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Simon Hoyle is head of market insight for CoreData Research.