An outside adviser’s take on FPA Congress

I think the first thing that struck me attending the FPA Congress in Melbourne this year was the overwhelming sense of doom in response to the current series of regulation.

Without wishing in any way to minimise the real stress that abrupt regulatory change can bring, it certainly struck me that a huge amount of negative energy was and is being spent on something that, in the final analysis, we have very little control of.

I should say that Australian financial planning has a good reputation worldwide, and the relationship between Australian planners, and the UK and South African markets has grown stronger in recent years.

So, I was expecting good things, and very much looking forward to not only speaking, but actually attending Congress, and meeting with and interacting with advisers.

I was surprised at a few things. One of these concerns related to the stands in the exhibition area for what we in the UK would regard as ‘Unregulated Collective Investments’ – property schemes, geared portfolios and the like.

I have a few concerns here.

One is that with the predicted drop in interest rates, Australia may make the same mistake as the UK and USA in falling into the trap of trying to design products and schemes to continue the higher levels of returns that consumers are looking for. Lord Turner, in his report into the 2008/2009 problems, referred to this as ‘pandering’ to the client’s desire for equity returns, but with cash risk.

These schemes all blew up in the face of market pressure, and the nature of the beast was to leverage the losses beyond those experienced by old-fashioned long only diversified portfolios.

As if that was not bad enough, the presence at professional conferences was interpreted as being some form of endorsement and was cited as a defence by advisers when the inevitable complaints hit.

This sullied all of our reputations, and I would counsel against repeating our errors.

View from afar

I thought it may be useful to share my thoughts on this year’s Congress, as someone who has worked in financial planning in the USA, the UK and South Africa, and who has spoken to and worked with planners in 15 countries in the last 10 years.

Overall, I also enjoyed the mix of topics, especially at a sponsored conference. Charity was front and centre, as was personal development. Whilst I know some be uncomfortable with this, and seek ‘harder’ content – tax, etcetera – I would rather study that in my own time, and use conference to challenge and be challenged in our thinking. That is always more profitable in the longer term than mere technical knowledge.

Whilst this was my first trip to the actual Congress, I’ve had a ‘distant’ relationship with the FPA for many years, and in particular, Dante De Gori and I have known each other for a few years, courtesy of serving on international financial planning committees together.

I mentioned I was struck by the sense of doom relating to factors outside of our control; in contrast to this, a good illustration of ‘what we can control’ was the unusual and very welcome focus on the proportion of women at the conference. It’s quite clear this is a priority, and is measured and targeted – well done all.

I think the gender balance was one of the contributing factors to the sense of ‘how young everyone is’; as a 58 year-old man, I was delighted to see this. Perhaps the next step will be looking at how current minorities are represented, and how we can get inclusion in those areas as well.

I was also surprised by how many individuals that self-identified as financial planners actually worked for companies with the words ‘wealth managers’ in their name. This is unusual in other markets.

The future for Australia

I fully expect the current level of angst to subside and real life to intrude. Partially, this is just human nature – we are much more afraid of the shadows beyond the fire, than the beast we can actually see and have learnt to manage – to push the metaphor, Wolves become Dogs!

A cursory glance around the exhibition space showed how much focus there is on tech solutions to our problems. This is great, but that will allow the export of work to cheaper economies. So we need to make sure that we understand and can deliver the high added value stuff – the relationship – whilst outsourcing the ‘commoditised’ part to data centres in Indonesia and Vietnam.

I expect to see much more conversation around intergenerational wealth and planning than I saw on this trip.

I expect to see much more cognisance of how ‘inter-jurisdictional’ many people now are, and more flexible solutions reflecting this.

I expect much reduced dependence on being paid for ‘superannuation’, and much more focus on planning around clients’ point of transition and change.

In short, I think I saw a world class industry, at a point of stress, but in a great place to grasp and exploit change on road to increased professionalism.