The Financial Planning Association’s annual professionals congress has been on this week. At the time of writing, we’re about midway through the second day of the event, and the first day of the really meaty content. Wednesday was given over to workshops for Professional Practices and paraplanners, and to an opening plenary session featuring Socceroos coach Ange Postecoglou and Olympic cyclist Anna Meares.
The event this year was also memorable for four members of the Professional Planner team who lugged 800 copies of the December – January edition of the magazine more than 3000km across the country in suitcases and hand luggage. But that’s a story for another day.
The 2016 congress featured a range of awards handed out by the FPA to the best and the brightest among its membership, which was refreshing and highlighted the level of excellence that financial planners can and do achieve but which too often goes unrecognised in the maelstrom of bad news and reports about things that have gone wrong.
And it featured an opening address by the CEO of the association, Dante de Gori, which was notable both for its clarity and as a statement of intent for the development of financial planning as a profession.
De Gori had some good news to tell as well, despite some silliness earlier in the day with a broken media release embargo. From July 1 next year, FPA members will have the option of signing up to a new section of its code covering opt-in, which will remove them from the need to comply with the legislative version of opt-in contained in the Future of Financial Advice (FoFA) laws.
That’s a piece of news that should not be underestimated – not so much because of the effect of being able to comply with a code rather than a law, but because it is both the first time the Australian Securities and Investments Commission (ASIC) has approved a code and the first time that the FPA – in fact, any specialist financial planning body in Australia – has been trusted in a co-regulatory role.
Trusting the profession
The message this sends is significant. It’s the corporate regulator – whom the public knows better for jailing, banning and otherwise sanctioning financial planners and planning businesses – saying it trusts the profession to police its own.
That’s quite a different message from the one the public usually receives. And it’s only a start, of course – once you’ve proven yourself capable of co-regulating something like opt-in, it’s not a huge leap to becoming a code compliance monitoring body under new professional standards that will come into effect under legislation introduced to parliament this week.
It all ties in with the three pillars that de Gori identified on Wednesday that he believes a profession will be built on: greater consumer awareness and trust, higher professionalism and standards, and links to universities to promote a flow of new entrants to the profession.
There’s plenty of action on all three fronts – a new consumer-focused online series called Money & Life will be launched next year – but the FPA isn’t alone, and nor should it be, in its quest to improve the financial lot of Australians. The online advice service, Map My Plan, this week released the 2016 version of its Financial fitness of working Australians report, in which it clearly identifies four parties with a responsibility to address the issue.
Map My Plan says the government, employers, superannuation funds and financial advisers all have a role to play in “improving our financial fitness as a nation”.
“Our research certainly found a positive link between using a financial adviser and being financially fit or super fit, and we’re already seeing the industry change to meet client needs,” it says.
Three clear opportunities
The report urges financial advisers to look closely at three opportunities it says its research has uncovered:
1. Put clients at the centre of advice, not products
2. Give more Australians access to independent advice
3. Take away the complexities and jargon.
The report finds that 60 per cent of working Australians have never sought professional financial help, and that after the issue of cost – they think it will be too expensive – there’s a clear a perception that advisers are too focused on selling products. And that they lack independence.
“While there are financial advisers who put their client interests first, until all financial professionals separate advice from specific financial product, there will always be an inherent distrust,” it says.
“True independence starts with a client-first approach, and recommendations based purely on the individual situation rather than revenue streams for those giving advice.”
Map My Plan says “ASIC’s ongoing reviews into this sector have shown, there are fundamental flaws within the current financial advice model”.
“And even with the removal of commission fee structures, there are still inherent biases that come from having advisers tied to a single institution or product type. ‘Fee for service’ payment models also mean those Australians most in need of help are least likely to be able to afford it.”
Thing is, Map My Plan is absolutely spot on, but so is de Gori. Map My Plan has confirmed the current perceptions of financial advisers and financial planners, and de Gori has identified a path away from those perceptions towards something altogether more likely to be embraced by the public.
Whether the FPA is right, and has identified the appropriate pillars to build a profession on, will only become clear over time. It will be reports like Map My Plan’s, which measure attitudes towards advice and advisers as well as the actual financial fitness of Australians, that will give us the best indication.
