The Australian Bankers’ Association’s (ABA) new protocol on financial planner recruitment, announced on Tuesday, won’t become the “blacklist” of financial planning mythology, but will play a significant part in professionalising financial advice and in identifying financial planners with poor advice, compliance and risk track records.
The protocol applies to seven ABA member banks that have financial planning businesses, plus AMP. And it extends beyond the bank-branded advice networks to aligned networks – including Financial Wisdom and Count Financial (CBA); Godfrey Pembroke, JBWere and NAB Financial Planning Self Employed (NAB); Financial Services Partners, Millennium3 and RI Advice (ANZ); and Securitor and Magnitude (Westpac). For AMP it includes Charter, Hillross and ipac.
The ABA says current signatories account for about 38 per cent of all financial planners currently on the Australian Securities and Investments Commission (ASIC) financial advisers register. The protocol has been years in the making as stakeholders negotiated issues relating to privacy, defamation and employment law.
Diane Tate, the ABA’s executive director of retail policy, says the protocol “introduces a series of standardised questions, which go to quality of advice, risk management and compliance, and that talks to the conduct history of a financial adviser.”
“When there is a future employer looking at a financial adviser they can contact their current employer and ask some questions – that series of standardised questions – and get fact-based answers and make an informed recruitment decision,” she says.
“The questions go to conduct history and make sure a bank is better informed about the conduct history of an adviser they are looking to employ.”
The issues covered may or may not include breaches which are already recorded on the ASIC register.
“This is about conduct history and their performance,” Tate says. The protocol officially comes into effect on March 1 next year, but some ABA members may have operational before then.
Standing for professionalisation
The protocol will be of greatest assistance when one signatory is looking to recruit an adviser from another signatory. Non-signatories may request the same information from signatories, and Tate says it is up to each individual signatory to decide whether or not to provide it.
It will not be of much assistance where one non-signatory is seeking to recruit an adviser from another non-signatory. Tate says that for the protocol to have the greatest impact it requires more licensees to sign up.
“It would be great if the entire financial advice industry became signatories to this,” she says.
“To be a subscriber to this means you are standing for professionalisation. The ABA has our members, and AMP has worked with us on it, which is great; but there are other advice businesses out there and we would encourage them to contact the ABA and look at the protocol.”
The protocol is voluntary for ABA members.
“It is in the interests of all the subscribing licensees that this works, Tate says.
“This is about reciprocity. When you provide information you will get better information. There’s an in-built incentive in the protocol’s operation for it to work. We’ve said in the early stages of this being implemented if there are any operational issues that they identify as subscribing licensees, to let us know and we will work through the issues.”
Tate says “other stakeholders” were consulted in developing of the protocol, including “practitioner organisations,” but it is a bank-led initiative.
“In all honesty, banks have been bashed around the head,” Tate says.
“This is a genuine commitment of the industry to make an effort to restore and build trust and confidence in banks; but this is a really important part – one of the parts – of professionalisation of financial advice.”
The chief executive officer of the Financial Planning Association (FPA), Dante De Gori, says the association was consulted during the development of the ABA protocol and “we were able to provide feedback into that.”
“But this is an ABA standard, it’s not an FPA standard,” De Gori says, and the ABA protocol does not apply to practitioners.
“The ABA members are employers [of financial planners],” he says.
“But advisers should be aware that if they are going to work for one of those member organisations that this is a protocol that they have signed up for.
“So if you’re looking to shop around for a licensee in the ABA family, you’re probably not going to get away with it if you don’t measure up.”
