In truth, there are many, many more important things in the world and in life than whether the financial planning industry can ever evolve enough to become a profession. Sure, it would be better for all concerned if it did, but what, truly, would be the downside if it didn’t?
Most Australians are covered by a compulsory superannuation system that will see to it that they have at least some savings to supplement the age pension when they reach retirement. The longer the system is in force, and the longer individuals are in it, the better the results will be.
Yes, the outcomes could be better, if individuals could be encouraged or enabled to contribute more. And yes, the results could be better if they also made good fund and investment choices along the way. But as the system matures, and people accumulate greater sums, the impetus to seek advice diminishes.
Most people in superannuation have some life insurance cover. It may not be as much as they need, but some is better than none. Again, as the system matures, and as super fund insurance cover is refined and improved, the thought of seeking external advice on better cover, and smarter ways of structuring it, recedes.
There’s an accurate and widespread belief that it has been too easy, for too long, for individuals to become qualified to practise as advisers. Finance is already a complex and potentially worrying field, and it’s understandable that there is a reluctance to entrust one’s financial security to an industry that has had such lax entry standards, even if it persists in describing itself as a profession (which it isn’t, yet).
Financial issues can be handled better, be less stressful and produce much better outcomes for the individuals concerned if they receive professional advice. But unless there’s a compelling reason to seek that advice, they just won’t. They don’t now – more than 80 per cent of the broader population hasn’t sought advice – and if the industry doesn’t change, then the take-up of the industry’s services won’t change either.
The financial planning community may or may not find the resolve to do what needs to be done to establish appropriate education, professional and ethical standards, but really, does it matter?
Yes. For financial planners.
If financial planning fails to become a profession by not embracing higher standards, then it will probably stagger on for a few more years, another decade if it’s lucky, before it is terminally poisoned by institutions’ malpractice and the stunningly shortsighted self-interest of a minority trying to protect the status quo. The public will continue to stay away in droves from the industry and its practitioners.
Good businesses might survive, but some won’t, with potentially devastating consequences for owners and staff, and disruption for clients. Financial planning will remain a laughing stock among established and recognised professions. And ultimately, people will still retire, and buy houses, and put their kids through school, and deal with the deaths of loved ones and handle all of life’s financial challenges, and they’ll do it just like they’ve always done it – by and large, without financial planners. Life will go on, because it always does.
Australians don’t need more excuses not to use financial planning services. They’ve already got plenty. To name a few: a conga line of advisers banned, suspended or otherwise disciplined, year after year; the intractability of institutions that regard financial planners as distributors and as salespeople for products; the inability to recognise and manage conflicts of interest; low barriers to entry; and more recently, an attempt to discredit proposed education, professional and ethical standards, the standard-setting process, and the motivations of those involved. It’s crossed the line from being a debate about the merits of change and the best methods of implementation and transition, to become something uglier and corrosive, which signals clearly to the watching world that professionalism is something a segment of the industry fears and rejects.
Right now, financial planning is at an inflection point. It can evolve, and be seen to embrace its evolution, or it can stagnate and conform to all of the public’s most deeply held preconceptions. The choice is in the hands of every single practitioner. It cannot be a passive decision. If there is, indeed, a silent majority out there, somewhere, that supports the coming changes and is committed to raising standards, then now would be a good time to speak up. It would be a good time to actively debunk the innuendo and the slurs that are being circulated against those who have stepped up to lead the way.
Don’t kid yourself that because you have happy, satisfied and successful clients, everything is rosy in the wider industry, too. That kind of thinking is shortsighted. The few hundred clients you may have (if it’s that many), are peculiar within the broader population because they’ve sought out advice in the first place. If the people you have most contact with are happy clients, then it’s easy to assume all is well and miss the fundamental ills that continue to plague the broader industry. Don’t fool yourself that the situation will somehow change without your explicit commitment to changing it, at an industry and a profession level.
Yesterday (Thursday, February 1) was my last day at Professional Planner, and at Conexus Financial, the company that publishes it. After more than 10 years with the publication, I’m moving on to try other things. I know that in some parts of the industry, this will be welcomed (and I know that because I’ve already enjoyed the benefit of some of those opinions).
It would not have been possible to persevere in the task of managing a publication that stands for higher standards of education, professionalism and ethics without a fundamental belief that your industry can and should be better, and that as a practitioner, the value you can deliver to ordinary Australians should be more widely recognised and valued.
It wouldn’t have been possible to do it if Conexus Financial chief executive Colin Tate had not also been committed to the same ideals, and backed his editorial team with enthusiasm and unequivocal support.
It certainly would not have been possible without the explicit support of hundreds and possibly thousands of individual advisers who over the decade have emailed, texted, written (yes, the art of letter-writing is not dead) their support and also expressed it in person. So I know you’re out there, and I want to thank you for that support.
In the February 2018 edition of the magazine, I’ve written a column that tries to explain why I think a crucial next step in the industry’s evolution is down to individual accountability and resolve. Many of the problems the industry has caused for the people it supposedly serves could have been avoided if the individual advisers involved had a greater appreciation of the bigger picture that comes with being a true professional.
Read that article if you like, or don’t; if it makes sense to you then great, and I urge you to take on that responsibility. If you do not agree that professionalism can happen only with the active and committed support of each and every practising financial planner, then that’s OK too, and maybe in your mind professionalism is a bridge too far. But trying to stop others from crossing that bridge is deplorable.
Some things have to be done collectively, the creation of real professional associations, as opposed to industry or commercial associations, for example. Those things take leadership and courage and the financial planning community is fortunate to have had leaders with courage, over many years.
But it takes no courage and it certainly takes no leadership or vision to exploit uncertainty and fear, to turn the debate personal and to undermine the good work that’s been done, and that needs to be done. To what end? To preserve an industry structure and standards that have demonstrably failed to serve the public interest, and in many cases even the interests of clients, and which have been shunned by an overwhelming majority of Australians?
You can lead a horse to water, but if the horse turns around and shits in the river, then you’re reminded that a horse is, after all, just a big dumb animal.
Some financial planners I’ve met are big dumb animals, for sure, but a vast majority are highly principled, committed and more than ready to take on the responsibilities of becoming professionals. If you’re one of them, the future of financial planning as a respected a trusted profession rests in your hands. Don’t let the small minds drag you down. Engage with your peers and with your professional associations, and speak out in support of what needs to be done. Hold fast – and good luck.