The mud-slinging match during the commission has left the industry with an image problem that needs to be rectified, according to Sequoia Financial Group chief executive Garry Crole.
He hopes that in time, regulators and the government could better understand the positive role that advisers play within the broader financial landscape, but that will take a concerted effort by financial advisers to better articulate their value in the market.
Crole tells Professional Planner financial advisers are not valued highly enough for the role they play.
“There’s a lot of negativity associated with advisers,” he says. “The rise in robo-advisers and the less skilled advisers have also led to some negative perceptions out there.”
It’s a fair statement given that research by IOOF (now Insignia Financial) a couple of years ago revealed that there are several myths out there about financial advice. For one, that advice is just about getting richer and getting higher returns. That advice is just for the rich, and that it will cost more than the value it provides.
But Crole is the first to admit there’s no silver bullet to debunking these myths.
Where it all began
He’s been in the industry longer than most, starting out in 1987 as an adviser with Colonial Mutual. He decided after a few years that marketing products for one company wasn’t the way of future.
So, he set up what was one of the first multiple agency businesses in the nation, which traded as The Money Planners. In the 11 years as the CEO, the business transitioned during changes in legislation to become a life insurance broker and an Australian financial services license, known as Deakin Financial Services.
The company listed on the ASX and was later renamed DKN, before being sold to IOOF around 2001.
Crole accepted the role as managing director of InterPrac Financial Planning in 2003 and invested equity. Interprac was established to provide a range of services to accountancy firms including licensing and partnering accountants with a financial planner or risk insurance specialist. InterPrac has been helping accountants and advisers deliver financial service solutions by operating as an extension of a practice.
In 2018 Interprac was acquired by Sequoia which provides products and services to self-directed and wholesale clients and Crole become its CEO around a year later.
Sequoia has a broad service offering to intermediaries including wealth management and advisory services, corporate and capital markets expertise, retail, wholesale and institutional trading platforms market data and financial news services.
Sequoia focuses on reducing the cost of advice, from licensing, the cost of administration, setting up company super funds, selling advice and the like. The company employs about 100 people and like many firms, is on the hunt for new talent to join the team, in particular Crole is keen to support risk insurance specialists and stockbrokers looking to reduce their cost of operating.
Quite simply, he’s an experienced industry leader skilled in business planning, investment advisory, risk management and investment management. He’s also recognised as a strong business development professional with an advanced diploma in financial services from Deakin University, and at Deakin Financial planning was one of the first industry executives to establish a registered training organisation to aid advisers with education and comply in meeting the then RG 146 requirements.
To be frank, his life ambition is to support the advice industry and assist in driving value for the consumer in seeking and receiving best interest advice.
Staying ahead of the curve
Technology adoption will play an important part in reducing costs in the business, which extends across compliance needs, while artificial intelligence is enabling it to look for key statements in areas such as advice documents and advisers’ compliance surveillance.
“We have had to invest heavily in technology to improve business efficiencies and for cyber protection as well,” he says. “Unless you’ve got scale, you can’t be competitive, which is where technology comes into play.”
The firm has also faced its fair share of failed cyber attack attempts, he says: “We haven’t lost any data because we have invested in security, but we know attempts are inevitable”.
The experience taught him that spending on cyber security is crucial, leading to the appointment of a head of cyber protection across the group, while also employing several outsourced providers that understand cyber protection.
“Cyber risks are very real. You can’t just put your head in the sand and hope it’s not going to happen. You’re going to become a victim very quickly that way.”
Lack of new talent
Here in the crow’s nest, Crole can see the issues facing the industry more closely than most.
The cost of providing advice keeps him awake at night. A distinct lack of new talent coming into the industry as older advisers organically bow out as the reach retirement means the industry pool is shrinking.
“We’re already seeing a number of advisers retiring,” he says. “There’s less new advisers coming through with the potential to buy their client books. It’s a big issue and it makes me really nervous about the future.”
He’s also concerned about the trend of product manufacturers getting back into advice, adamant that it’s not in the best interests of clients. “A distinct separation between products and advice is a priority for us,” he says.
There are challenges ahead given that flagging financial markets, rising inflation and home loan pressure is occurring, but he’s not losing sleep over it.
“From our perspective, the financial planning process is the same in all market conditions,” Crole says. “If you understand the client’s needs and go through the full fact-finding process and make the recommendations in line with the client’s risk profile, the underlying market condition should not alter too much.”
He adds: “To be honest, I believe there might be a push for more demand towards an adviser when people realise that they’ve lost money in markets by trying to do it themselves, or they’ve dabbled in bitcoin and lost. Without the right education and in the current economic conditions, the stakes are high.”
I started as a tied agent with Legal and General in February 1987 and back then, having to spend 15 minutes filling in a Customer Advice Record before we could sell products, seemed such an inconvenience.
There were glaring problems in those early days that led us down a tightening Regulatory path, though what has never changed, is a wish from clients, that Advice and Products would be understandable and easy to read.
As an Industry, we failed back then and nothing has changed, except that the Government, who continually warned the Industry to sort itself out and if they failed, then the Government would step in, which even they said, is NOT what you would want.
So, as a collective, many platitudes were spoken and little was done to remedy a growing problem.
The biggest lesson EVERYONE needs to understand, is that Governments are incapable of fixing things.
Why do you think, they keep having Royal Commissions and endless investigations, then to make things even more opaque, ask the two main entities who thrive on complexity, being the Legal Industry and the Regulators, to fix the issues.
Now. let us go back to what ALL Australians want, which is simple and clearly articulated advice.
We have a big problem and will continue to have these issues until this is fixed.
Asking a Lawyer and a Regulator to explain things in plain English, is like asking a dog to pretend to be a cat. They are not trained for that and are incapable of providing that service.
Billions of dollars, a decade of confusion and a feeling of, “it is all too hard,” has led us to this tragic, black comedy of errors.
Simple, concise, easily understood advice, product, Regulations and processes, will fix the issues.
What we need is for this to become enshrined in Law, though that is the last thing the vested interest brigades want.
So, where do we go from here?