Here are four propositions with which nearly everyone in the financial advice industry will (or should) agree:

Proposition 1: Financial advisers should be trusted to act at all times in the best interests of their clients;

Proposition 2: The occupation of financial advice should be accepted as a genuine profession which voluntarily acts in the public interest;

Proposition 3: Financial advice should be cost-effective and accessible to the vast majority of Australians, not just to the minority who currently receive it; and

Proposition 4: The compliance requirements imposed on financial advisers is complex, costly, confusing, bureaucratic, demoralising, unnecessary and substantially ineffective.

Agreed? At least there’s some significant common ground between us (maybe more than many readers may have thought?).

So how can we move to a position in which financial advisers are always trusted, the occupation of financial advice is accepted as a genuine profession, the services of the new profession are cost-effective and widely accessible and the compliance burden on advisers is substantially removed?

It’s simple really. We should enthusiastically embrace the substance and spirit of the FASEA Code of Ethics.

Unfortunately, however, instead of supporting the code, many of the industry’s leaders have chosen to complain about it, especially about its alleged uncertainties. Standard 3 (the imperative to avoid, not just to disclose, conflicts of interest) has received particular attention from the complainants.

In so doing, they appear either to not understand the underpinning ethical obligations of a true profession or they don’t want to understand them. Therefore, it’s hardly surprising that so many of the industry’s participants are uncertain about the code and what it really means to be a professional.

Kicking it down the road 

Much of the limited public discussion about this subject has been emotional and lacking in rigour. Perhaps the price of professionalism is judged by some to be too high or commercially inconvenient. Could a better alternative be to fudge and obfuscate with tried and tested claims about ‘technical uncertainties’ and ‘unintended consequences’?

Alongside the complaining, there’s been no shortage of rhetoric about the industry’s strong commitment to professional ethics. This includes regular references to financial advisers being on a ‘professional journey’ which seems more like a mystery tour because the destination is rarely articulated. And to make the journey more interesting, there have been diversions along the way, including the need for education of advisers and the importance of individual licensing, both of which are worthy causes, but don’t get to the core of the problem.

All of this colour and movement has acted to kick the can down the road. Over many decades this approach has been shown to be an effective strategy to cause delays and dilution of urgent ethical reforms, especially with respect to conflicted remuneration. In fact, there isn’t an argument against reform in financial advice that hasn’t been heard and rebutted on countless occasions since the industry’s inception in the 1970s (yes, I remember).