It’s a long way to Perth. Those of us who find ourselves confined largely to the east coast sometimes forget just how far it is. It’s two-movies (one decent, one a stinker), a-good-chunk-of-season-two-of-Parks-And-Recreation, and falling-asleep-10-minutes-before-landing away. While the geography can be grasped in an abstract sort of way, it can still catch the occasional traveller off guard.
Professional Planner was in Perth on June 15 (and then Adelaide the following day) to attend the Financial Planning Association’s national roadshow. An estimated 270 planners turned up in Perth, and a further 250 in Adelaide.
The conversations at the roadshows provided an intriguing counterpoint to the discussions that took place at the 2016 Professional Planner Dealer Group Summit, held on June 6 and 7 and attended by more than 40 of the leaders of key financial planning licensees.
It’s not quite true to say that the licensee heads – with a handful of notable exceptions – are on a different page from the advisers who make up their networks, but it’s not far from it. Or perhaps it’s just that while they’re addressing some of the same issues, they’re not necessarily addressing them from the same direction, or with the same appreciation of the likely endgame.
There is still a nagging sense that large parts of licensee-land simply don’t grasp what’s going on at the grass-roots planner level. What’s happening, incrementally and sometimes painfully slowly, is the creation of a financial planning profession. And the penny has yet to drop for some licensees that a profession will be created, with or without them.
It’s not you, it’s me
When it does, the relationship between planner and licensee will change fundamentally. Some of the more forward-thinking licensees will adapt and become what are essentially service providers to the new profession; others will be left scratching their heads wondering what just happened, and why can’t they any longer just tell their advisers what to do?
Just by way of a brief (and over-simplified) recap, it’s worth remembering that a profession’s first responsibility is to the public interest. Then it’s to the client’s best interests; and only then does a professional have responsibility either to his or her own business or employer or – uniquely, in financial planning – to a licensee.
So, for example, it may be in a client’s best financial interest to pay no tax. However, it’s clearly in the public interest that we all pay our fair share of tax; and so a professional’s responsibility is to the public interest first, and then to make sure the client pays no more tax than they have to. If a client insists on a course of tax evasion, it’s the professional’s responsibility to decline to provide services to that client, even to the detriment of the professional’s own business, or of their employer (or, in financial planning, of the licensee) from fees or other income foregone.
That much should be obvious. But it serves to illustrate the idea that a profession is an autonomous, self-regulating and self-policing entity, quite closed off to those who are not counted in its membership, and therefore free from outside influences that would divert it from a professional course.
The manufacturers have twigged
A fair few product manufacturers have worked this out already, if only because they can no longer dial-up the flow of funds into a given product by cranking up the commission and then standing back. The relationship between planners and manufacturers has changed, and the next key relationship to change will be between licensee and planner.
So while the Dealer Group Summit and the FPA roadshows addressed the common issues of ethics, education standards and other elements of professionalism and what being a profession actually means, they did so in quite different contexts.
Among licensees there’s an ongoing belief that the licensee will remain at the centre of the advice universe, as it were – the hub around which the planners and their businesses will always revolve. But as a profession emerges, the real power and influence will move decisively to the practitioners themselves.
That’s a seismic shift that not quite everyone is ready for, it would seem.
