Dante De Gori speaking at FAAA Congress (credit Adam Hollingworth).

Having the privilege of travelling around the world to explore how financial advice operates in different jurisdictions and cultures, Financial Planning Standards Board CEO Dante De Gori has noted some familiar themes from his time back home.

Speaking at FAAA Congress in Adelaide, the former head of the Financial Planning Association noted the European Union is currently grappling with adviser education, along with banning commissions.

“In the EU, they’re looking at how to harmonise financial adviser qualifications so you can go across borders in terms of being able to work in different territories across Europe,” De Gori said.

He added there is a push to ban commissions in the EU, which has faced resistance.

“There’s been a big pushback from banning commissions, but the EU is very interested in trying to ban commissions across EU territories,” De Gori said.

“That’s been pushed back, but now they’re looking for guidance how to improve transparency and choice regarding commissions.”

Australia banned commissions on investment products in 2012 under the Labor government’s Future of Financial Advice reforms.

While Australia’s defined contribution system celebrated its 30th anniversary last year, De Gori said The Netherlands has just legislated change away from defined benefit superannuation schemes.

The Future Pensions Act passed the Senate in The Netherlands in May, which will introduce a defined contribution system similar to Australia’s.

“When did we get rid of defined benefit schemes? Isn’t that amazing,” De Gori said.

“The Netherlands have around 2500 CFP professionals. They’ve got a pretty decent financial advice market but with the defined benefits schemes going, it’s opening up a brand-new opportunity.”

While commissions still exist for life insurance products in Australia, albeit at the capped level of 60 per cent up front and 20 per cent ongoing, De Gori said life insurance advisers are becoming “extinct” in Thailand and not because of any regulatory reforms.

“They are wanting to be trained in financial planning and holistic financial planning, so a big emphasis there,” De Gori said.

“That has nothing to do with commissions, it’s just a value-add type aspect. There are discussions regarding disclosure of commissions, but there is a big change and emphasis towards holistic financial planning.”

Cultural exchange

The shift to a focus on client strategy means jurisdictions approach financial advice differently because of cultural reasons, rather than because of separate regulatory frameworks.

“The layer of complexity of politics and religions on top of that as well, it’s just really fascinating,” De Gori said.

“In some territories, estate planning is not something you would discuss culturally. Each territory is a little bit different in the way financial planners have to adjust and the emphasis of the advice needs for those territories is very different.”

For example, De Gori said the Japanese government is attempting to educate local consumers to invest their money as a conservative culture led to holding cash being common.

“They’ve got a massively ageing population, they have a low birth rate, and financial planners in that country specifically said professionals have been asked to go on the front line to do financial education, financial literacy and financial capability,” De Gori said.

In Israel, De Gori said, it was “technology, technology, technology” with a much stronger embrace compared to Australia.

“When I was there, their whole conference was about technology,” De Gori said.

“Fifty per cent of the presenters were aggregators regarding open banking which I thought was amazing, but they just embrace technology like there’s no tomorrow.”

Generation next

De Gori said the commonality between almost all territories was the challenge to embrace emerging generations and outlining the value advice has for them.

He said he was at a conference showing headlines of what older generations thought about the youngest generation at the time.

“They don’t want to work, they’re lazy, they don’t have the time, attention span,” De Gori said, quoting the headlines.

De Gori said everything that being currently said about the next generation now was repeated over the last 100 years.

“It’s not the next generation that’s any different from previous generations, what’s different is the environment,” De Gori said.

“The environment is different, but our perception of the next generation hasn’t changed. Every territory is saying how do we engage with this next generation.”

Join the discussion