During 2016, Professional Planner published about 1950 articles, and distributed them to readers through 200 separate email newsletters. It was a busy year. Legislative reforms to professional standards and life insurance took centre stage, the country’s largest financial planning business reinvented its approach to financial planning, superannuation reforms threw up advice and strategy challenges for advisers and clients, and investment markets did their usual job of keeping everyone guessing.
Keeping tabs on fast-moving issues and news during the year was as challenging as ever, and we continued to try to cover a variety of issues from a variety of perspectives.
Ultimately, though, Professional Planner’s readers decide for themselves what is interesting and what isn’t. Here then, is the year in review, as judged by the articles most read during 2016.
January
We returned from the Christmas and New Year’s break to read all about the experts’ predictions for the year ahead. A clear area of focus was the rise of robo-advice, and how that would mesh with the provision of human-led, face-to-face advice. Our line-up of experts identified the role technology would play more broadly to improve practice efficiency and, of course, the development of professional and ethical standards also featured. To get everyone thinking, the chief executive of ClearView Financial Advice, Todd Kardash, pinpointed a conundrum facing advice businesses: most are not profitable, yet the public perceives that financial advice is unaffordable. Fortunately, Kardash wrote, this is a problem that can be fixed.
February
The self-managed super fund industry gathered at the SMSF Association National Conference in Adelaide. Professional Planner’s daily coverage of the conference struck a chord with readers, as did a profile of a rising star in the financial planning ranks, Sunitha Chamala, the Gwen Fletcher Memorial Award winner for the best-performing Certified Financial Planner (CFP) candidate in semester two of 2015. Meanwhile, Commonwealth Bank continued to grapple with the fallout from various advice scandals. An independent expert’s report revealed that planners who had left its advice networks – principally Financial Wisdom – were proving to be a hurdle to obtaining the information about clients it needed to determine potential compensation. And in a kind of continuation of the theme of good advice, the executive chairman of Fortnum Financial Group, Ray Miles, wrote that a relationship of true trust between client and planner requires clearly separating products from advice.
March
CPA Australia began seriously ramping up its financial planning licensee business. Critically, advisers that operate under the CPA Australia Advice (CPAAA) licence would meet the Corporations Act’s definition of independent, and the association representing more than 160,000 accountants across Australia stated that it believed the public was crying out for an advice business not beholden to product providers or other vested interests. On a similar theme, Professional Planner contributor Max Newnham explained why accountants needed to decide before July 1 whether they really want to be in the advice business – and what to do about that; and Troy MacMillan, managing director of the Perth-based financial planning firm TWD explained to profile writer Melissa Mack why quality in the financial planning industry can truly be defined only by clients.
April
Having resisted the temptation to unleash a joke on readers at the start of the month, Professional Planner revealed CPAAA’s pricing structure. Fund manager Roger Montgomery, chairman and chief investment officer of Montgomery Investment Management, set the rabbits running in part one of a two-part series on why index investing is dumb. Meanwhile, Phil Anderson, formerly of the Association of Financial Advisers but by April ensconced with netwealth, spent some time reviewing submissions to the government on what was then proposed as the Life Insurance Framework (LIF) legislation. Anderson noted “the passion that remains in this debate”. But that was nothing compared with events later in the year.
May
Retrospective changes to superannuation were in the crosshairs of Melbourne financial planner Dominic Alafaci. He wrote for Professional Planner that changes announced in the 2016 budget by Treasurer Scott Morrison were “significant and immoral”.
“I have advised thousands of clients for more than 30 years on the best way forward for them, given the law at the time,” Alafaci said. “Never have I been confronted with such stupidity in a retrospective change which forces clients to abandon plans which have been based upon the rules of the day.”
Meanwhile, ANZ confirmed its commitment to its financial planning businesses. Chief executive Shayne Elliott and managing director of wealth in Australia, Alexis George, said the bank’s wealth division – which contains its financial planning licensees and accounts for only about 8 per cent of group earnings – is a business the bank is committed to and plans to bring closer to its core banking business. Before the end of the year, however, the wealth division had been put up for sale.
In other news, we revealed the finalists in our 2016 Professional Planner/CoreData Licensee of the Year stakes. Spoiler alert: the winners were ANZ Financial Planning (institutionally branded), Financial Services Partners (institutionally affiliated) and GPS Wealth and Fortnum Financial Advisers (independently owned). Also, the so-called “father of FoFA”, former minister for financial services and superannuation Bernie Ripoll, became a director of the online advice business Map My Plan.
June
We marked the halfway point of the year by revealing changes to AMP’s buyer-of-last-resort (BOLR) arrangements, designed to eliminate AMP product-bias from the valuations of financial planning practices. We revealed the winners of the Licensee of the Year awards (see above); and writer Ben Power delved into the pros and cons of outsourcing paraplanning services offshore. Meanwhile, in one of his now-regular Friday rants, the editor of Professional Planner took aim at stockbrokers’ efforts to “reform” remuneration practices, pointing out that brokers continue to lag behind financial planners by years.
July
Writer Johanna Leggatt profiled Adrian Patty, a Sydney-based financial planner who at 25 set up his own financial planning business. Patty said he was keen to use his experience to mentor other planners who also want to set up on their own. He’s learned a few things; for example, using his initials to name AP Financial Solutions was OK for the first 18 months “but after that it becomes annoying”, he mused. A Friday reflection piece questioned the wisdom and motivation of calls for financial planners to quit the AFA and the Financial Planning Association, and warned of the danger of being left out in the cold as a result. Professional Planner also suggested a new standards body the government proposed need not completely reinvent the wheel when it comes to education standards for financial planners. Most of that work has already been done by the Financial Planning Education Council (FPEC).
August
The gloves came off in the fight over the LIF, with a breakaway group from the AFA sparking a civil war by opposing the body’s stance on the reforms. While moves to have the AFA reverse its support would ultimately fail, the infighting damaged both the AFA and the public standing of financial planning. We revealed the finalists in the Professional Planner|Zenith Fund Awards, and took a look ahead to 2024, after which all of the planned professional, education and ethical standards reforms planned for the industry will have been bedded down.
September
Breaking up is hard to do, or so the saying goes, and it’s certainly true when it comes to self-managed super funds. Max Newnham explained that sometimes the assets of an SMSF decline to the point it’s no longer viable – and then the fun and games start. Newnham also warned advisers to act sooner rather than later to assess the impact on clients of new superannuation rules. And in a Newnham trifecta, he also provided insights on how to minimise tax in the event of the death of an SMSF member. In other superannuation-related articles, a Friday reflection piece advised certain financial planners to lose the chips on their shoulders and understand that industry funds aren’t the enemy that many suppose them to be. This was not a view readers universally accepted. Finally, Roger Montgomery was at it again, suggesting that the so-called “new normal” is actually just a fad, and following it unthinkingly could do untold harm to clients’ superannuation accumulation plans.
October
AMP’s new goals-based advice business, AMP Advice, was formally unveiled, along with a robo-enabled front-end to the advice process and the launch of a range of so-called goals explorer centres. Professional Planner and Zenith Investment Partners named the Fund Managers of the Year, and Johanna Leggatt profiled Esther Althaus, who explained how an accidental encounter with financial planning led to a blossoming career. A Friday reflection piece examined ASIC’s action against the big banks for charging customers for advice services they hadn’t provided, pointing out that the banks stuff it up when they do provide advice and they stuff it up when they don’t provide advice as well. And we wondered out loud why the Minister for Revenue and Financial Services, Kelly O’Dwyer, had bothered to announce the establishment of the new standards body when this fact had already been known for months. The answer? Politics.
November
Legislation for new professional, ethical and education standards for financial planners was introduced to Parliament. It didn’t get anywhere before legislators rose for the year, but it was a positive development set to resume in early 2017. O’Dwyer also announced that there would be no exceptions for any financial planners from the planned industry exam, set as part of the new standards. The industry gathered again, this time in Perth for the FPA Professionals Congress. The big news from the event was ASIC’s approval of the FPA’s opt-in code, which would remove compliant financial planners from the more cumbersome legal requirements of opt-in. And as Paul Harding-Davis looked back on a career in financial services, he reflected on what he saw as an industry on the cusp of transformation.
December
The year drew to a close with another doozy from Montgomery, warning property investors that they’re trapped in a bubble. We took a closer look at ASIC’s approval of the FPA opt-in code, and why it’s a potential step along the path to co-regulation of financial planning by financial planners. A line-up of hand-picked experts reflected on the events of 2016 from their various perspectives. Preliminary research presented at the Personal Finance and Investment Symposium discovered the confusion caused among planners themselves by the term ‘independent’. And we also took the opportunity to reflect on the quality of the best Australian financial planning businesses, drawing on the three finalists in the FPA Professional Practices of the Year award, and concluded that the best Australia has to offer is the equal of anything in the world.
