Letters to the editor: August – September 2018

Matthew Smith

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September 11, 2018

Letters to the editor

September 2018

Pencil The article (“AMP wears the cost of bad advice”, Professional Planner Online, July 27) offers a perfect example of the problems plaguing the industry. AMP will not ‘wear the cost’ if the only impact is to reduce a dividend to 70 per cent to 90 per cent of guidance. If we had a regulatory framework that imposed penalties effective enough to wipe out a dividend for three years, the problems would evaporate instantly. The shareholders would make sure of that. If we had a regulator with the intestinal fortitude to suspend a major financial services licence for, say, two years, the problems would evaporate for the same reason. For AMP, this is an inconvenience, but it will be business as usual.

David Smith: Frost Financial Planning 

Pencil Individual advisers do not have the resources to handle the compliance requirements (“Would the financial planning industry be better served with individual licensing for financial advisers” Professional Planner Online poll). We employ a full-time compliance manager and support staff to ensure we meet compliance. If individual licensing were introduced, advisers would spend most of their time doing their own compliance, under the present regulations. Most advisers would become non-compliant. Compliance is very hard to achieve and poor supervision is the primary reason non-compliance has occurred. My concern about the Hayne royal commission is that we will end up with more regulation when what is required is a consequence for poor behaviour. The banks, AMP and the larger dealer groups have real issues in meeting the supervision requirements and this is the lesson to be gleaned from the royal commission. Their culture is all about sales and very little about their clients’ best interests and this is what’s wrong with financial advice.

William Mills: Price Financial Intelligence

Pencil Good article on what I believe to be one of the top three issues facing advice in the next few years (“Two-thirds want individual licensing: poll”, Professional Planner Online, July 10). The law of unintended consequences must be examined. The vital piece in the puzzle is how professional indemnity insurers would manage this. It would be worthwhile getting some commentary from one of the brokers or the insurers themselves.

Peter Worn: Enzumo

Pencil I’m not sure whether Pamela Hanrahan was serious (“Are most advisers really doing the right thing?”, Professional Planner Online, July 25) or whether Matthew Smith is misquoting her to generate reader outrage. (Editor’s note: Pamela Hanrahan has been quoted properly in the story.) The simple fact is most of the problems relate to advisers not documenting the seven safe harbour steps to the satisfaction of ASIC. I’ve asked my licensee for a karaoke machine with the words to sing – that is, instructions for documenting the process appropriately – but they haven’t done this; therefore, the process is open to interpretation and this is where the bulk of advisers are being caught up. I’m happy to have a conversation with Ms Hanrahan to tell her how I have helped my clients over the last 20 years. We have clients going back 35 years and their files tell a great story over this time.

Daryl La’brooy: Hillross

Pencil So, William Mills says most advisers don’t realise how hard compliance is (“Two-thirds want individual licensing: poll”, Professional Planner Online, July 10). Last time I checked, all advisers were required to be compliant under a process administered by their licensee. That wouldn’t necessarily change under an individual licensing model, only the buck would stop with the provider of the advice, as it rightly should. As for the comment that individual licensing would lead to “…a bigger disaster than it is now”, I didn’t realise that financial advice (which is what I presume Mr. Mills is alluding to) was a disaster! The majority of advised clients seem to be well served and satisfied.

Wayne Leggett: Paramount Financial Solutions

Pencil Thank you Phil [Anderson, AFA general manager of policy and professionalism], for putting the issue of grandfathered commissions back into proper context (“AFA doubles down on grandfathered commissions”, Professional Planner Online, July 26). Treasury shows how out of touch it is by suggesting that advisers simply make up the shortfall by putting up their prices. The ‘real world’, of which Treasury is obviously oblivious, does not operate that way. Only a bureaucrat in his ivory tower would suggest putting up prices.

James Wilkinson: Retire Secure

PencilRegarding your article, (“We’re thinking about SoAs all wrong”, Professional Planner Online, June 22), how could anyone compare an SoA to a tax return?  One relates to a defined period after the service has been provided. The other is a plan or guide to how things may turn out over anything between five and 40 years. Insurance premiums change, fund fees change, fund performances, governance, legislation, tax rulings – they all change. It goes on. They are not even close to being the same and shouldn’t be compared.

IAN HAMILTON HAMILTON INSURANCE & INVESTMENT SERVICES / SINGLETON, NSW

PencilHas the team at PP envisioned the next step in the banks’ ‘exit’ (“CBA joins the great wealth escape”, Professional Planner Online, June 25). Isn’t this a great opportunity for the banks to clear the decks, replace the culture and bring on board a new team focusing on ‘robo’ delivery of basic next-generation advice based on a US model?

MURDO MACLEOD FIDUCIAN FINANCIAL SERVICES / NEWCASTLE, NSW

PencilWhen the Financial Planning Association was looking to move away from commissions in 2009, it produced a discussion paper, conducted a national roadshow and asked for member input.  This time around, the first members heard about the FPA’s move to end the grandfathering of commissions (“Battle of the Ban: the conflict to end grandfathered commissions”, Professional Planner August 2018) was when we read about its submission to the Hayne royal commission! Financial planners have bought businesses, borrowed money, employed staff, invested in premises over the last five years, all on the basis that the grandfathering would continue. The FPA’s conduct is appalling. Are they representing consumers? If so, they should end the masquerade of pretending they represent financial advisers.

DARYL LA’BROOY HILLROSS / MELBOURNE, VIC

PencilInsisting on removing related degrees such as accounting and business (“Deakin Uni backs FPA’s CFP push”, Professional Planner Online, July 6), which I would have thought were useful for advice and running a successful business, would lead to older advisers, 10,000 of whom are business owners, selling our businesses for less, leaving millions of clients in the lurch, sacking workers and exiting. Thousands of redundancies and a huge loss to FPA membership! Aside from highlighting the vested interest here, I think it’s time to re-think the FPA position regarding the social cost, mental health cost and the lost jobs, mentors and teachers of the next generation of younger advisers. This is coming from a licensee and business owner who previously worked in HR and organisational psychology, where part of my job was making people redundant.

PHILIPPA HUNT ARTEMIS INVESTMENTS / SUNSHINE COAST, QUEENSLAND

PencilNo such thing as a relevant degree!? I couldn’t disagree more (“No such thing as a ‘relevant’ degree: FPA”, Professional Planner Online, June 13). I commenced my university studies straight out of high school in 1998 and at the time my university of choice did not offer a financial planning course, so the closest pathway was my commerce degree, majoring in economics and finance. After finishing my degree, I completed a diploma in financial planning and have since worked for 11 years as a financial planner. Now the association that I pay fees to in order to represent my interests wants to send me back to study! Surely there is no conflict of interest involved here, with the association generating more fees in education costs.

JONATHAN VAN OMME BOS FINANCIAL STRATEGIES / PERTH, WA

PencilIn my mind, individual licensing would remove much of the blame shifting and confusion that currently exists but only if a legal fiduciary standard is codified into the Corporations Act (“The FPA’s plan to move licensing to individuals”, Professional Planner Online, May 16). While no single change will be a silver bullet for the industry’s woes, moving to a legal fiduciary standard would force the dismantling of the vertically integrated business model, which is at the heart of almost every unethical, immoral or illegal act that our industry inflicts on the public. In addition, until the FPA also adopts a stated fiduciary standard for its members, everything else is window dressing. A legal fiduciary standard would eliminate any FPA member who works in a vertically integrated business model. While the short-term revenue consequence for the FPA would be significant, in the long run, it would build an organisation capable of representing a real profession.

MATTHEW LOCK STEWARDS FMG / SYDNEY, NSW

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