If the financial planning industry were a house and you were considering renovating and improving it, would you work with the foundation already in place or would you consider it a ‘knock down rebuild’?
Since the government’s December 20 decision to significantly reduce the extent of last year’s Future of Financial Advice (FoFA) legislation, there could be an argument to just knock it all down and establish new foundations upon which to build great financial advice firms.
2013 wasn’t a year for great leadership in financial services. Future-minded advisers might remember a similar outcome regarding the Accounting Professional & Ethical Standards Board (APESB) decision of earlier in 2013. After nearly five years of open debate, acceptance and implementation about proposed new accounting standard (APES230) that would ban product-based fees being accepted by accountants providing financial advice, this standard was effectively revoked after five short months of behind-closed-doors lobbying by industry participants.
For those claiming the new best interests duty will meet these concerns, that remains to be seen. “Best interests” has as much chance of attracting more Australians to engage financial planners as “sugar-free” has of reducing weight.
It seems consumers continue to be easily forgotten by politicians and industry leaders intent on maintaining the status quo which, on the one hand, forces consumers to save (via superannuation), but does not guarantee an approach to effective financial advice regarding those savings that is impartial, transparent and effective.
My firm and a small group of financial advisory firms began work in 2013 to provide more Australians with greater financial certainty, confidence and service without any connection to products, platforms or manufacturers. One of the results of this work is a book – Seeking Certainty – which is being launched in February. This consumer book attempts to prepare consumers for the emerging advice profession where public interest is first, client interests are second and provider interests come thereafter. The book outlines the approach informed consumers might consider as they seek a better deal and value from financial advice.
Our small group is also exploring an accreditation – a certification trade mark issued by the Australian Competition and Consumer Commission (ACCC) – to potentially support advisers and consumers identify some boundaries that might define impartial advice engagement and delivery. The group dismisses the death of the independent, disputes the idea that good advice is priced beyond most Australians, and disagrees with many of the other existing sales and product beliefs that have underpinned some of the bad 2013 leadership decisions.
The book and the assembled group of advisory firms are not the answer to the current predicament state of financial advice, but just one small example of new developments that combined with others will hopefully see a new advice profession grow from today’s financial planning industry. There’s never been an easier time to differentiate financial advice firms from financial product firms.
There’s never been a better time to build a great financial advice firm.
