On Wednesday night, a group gathered in Sydney to farewell Brad Fox, the former chief executive of the Association of Financial Advisers (AFA). Phil Kewin, a former Zurich executive, replaced Fox in early March, and Fox has been hanging around to ensure the transition goes smoothly.
All the early signs suggest it has been smooth, and that Kewin will be an able leader for an organisation that, like many in financial services, needs to find a way to stay true to its origins and roots while remaining relevant in a fast-changing industry.
The gathering was an opportunity to reflect on the nature of leadership. True leadership is often lonely. While Fox spoke at length about the support the AFA team provided him, the fact remains that he was the public face of an organisation that sought to lead its members through unpopular reforms to a better position. It’s not always easy to lead disparate elements to common ground; elements of the AFA’s own membership made the job particularly difficult.
It was the former French president Charles de Gaulle who said: “How can you govern a country that has 246 varieties of cheese?” De Gaulle probably wasn’t actually suggesting that a country with 246 varieties of cheese is ungovernable; the issue of governing France has nothing to do with cheese literally. He was speaking about a mindset. A country that perceives within itself such regional differences and independence as to produce 246 different varieties of essentially the same foodstuff requires a particular form of leadership.
The trouble with opinions
If de Gaulle were running the AFA – or any industry association in financial planning today – he might reframe his question as: “How can you govern an organisation whose thousands of individual members each has unfettered access to social media and the comments sections of newspapers and magazines?”
The challenges of leadership arise from the mindset of people who have opinions and a means to air those opinions enthusiastically. When Mark Rantall was chief executive of the FPA, he regularly said that a true profession doesn’t air its dirty laundry in public. Public personal attacks against colleagues and leaders of the industry would be unheard of in other professions. What makes it particularly self-defeating is not only that the comments are visible to anyone searching for information on financial planners, but that the opinions are often of a highly vocal minority, expressing sometimes outdated and superseded views, usually with a mindset against change and progress.
That’s not to say anyone’s opinions should be muzzled – far from it – but a bit of self-awareness wouldn’t go amiss occasionally. It’s difficult enough for people looking for a financial planner to find one they can trust and work with, without the quest being derailed by coming across the sniping and backstabbing that too often masquerades as debate.
Recommending a planner is hard
A friend from overseas shot through an email a few months ago asking for the name of a financial planner they could see when they’re in town next. His opinion of financial planners wasn’t high. That was due, in part, to his own lack of knowledge of the industry and its services. But he’d also stumbled onto the comments section of another publication and could not believe how brutal the conversations there were. His opinion of the industry was vividly coloured by the vitriol and anger that he found.
It’s always a difficult question to answer when someone asks for a planner recommendation –much more difficult than it should be. I don’t know how many financial planners I know; it’s probably hundreds. The number I would categorically suggest be avoided is very low, but eliminating so few from a total pool of 24,000 authorised representatives is no help at all in making a positive recommendation, and just saying “I don’t know” isn’t a satisfactory answer, either, when a friend asks.
So I’ve developed a default response. It’s protracted but it’s at least a bit useful and avoids most of the risk of personally recommending someone who later turns out to be no good.
It involves a three-step online process: a filtered search on the FPA’s “Find a planner” website, a kind of reference check on the Adviser Ratings website, and finally, a hygiene check on ASIC’s financial advisers register.
Even at the end of this process, there’s an element of luck involved as to whether the adviser identified is up to the task and is a good personal match for the potential client – and whether the client is a good fit for the adviser, of course.
There’s still a feeling that anyone unfamiliar with the nuances of financial planning is being thrown to the wolves, and the comments sections of various publications only reinforce that view.
The financial planning industry scratches its head and wonders why the proportion of the community that uses advisers’ services remains stubbornly stuck at the 20 per cent mark, or thereabouts – or less, according to some commentators, if you count only active relationships. In fact, it can be quite daunting for a member of the public starting out cold to find a financial planner they can trust, feel comfortable with and develop an ongoing relationship with. And this is not helped by the infighting the public sees.
People want advice, as my friend’s enquiry illustrates and as demographic trends and predictions of intergenerational wealth transfer strongly suggest. In the vast majority of cases, people who see a financial planner get exactly the advice and guidance they need, and are better off for it.
A miasma of mistrust continues to stink up the industry and its practitioners. And this barrier to entry is a real problem if you believe, as Professional Planner does, that financial planning serves extremely important social and economic purposes.
Continued strong leadership, from people such as Fox, Kewin and others, is a critical part of the mix, and their success in leading even recalcitrant sections of their own membership towards higher education, professional and ethical standards will help short-circuit what can be an off-putting experience for anyone searching for a planner’s help.
