The chief executive officer of the Association of Financial Advisers (AFA), Brad Fox, has urged the financial planning community to accept accountability for errors committed in the past, but refuse to take the blame for issues that are not advice-related.
Speaking at an event organised by the Value Alliance – a joint venture between media relations companies 64Media and Pritchitt Partners – Fox said the“issue of public perception “is a live one, and if we’re going to deal with that, I think there’s three things we have to do”.
“We have to own the past,” he said.
“We have to be accountable for the wrongdoing and most of all we have to fix the real issues.
“There’s good things in everybody’s past, and there’s some bad things in everybody’s past. Financial advice has done so much good for so many people over the years that it’s existed…and it’s evolved and it’s evolved and it’s continued to evolve.
“So let’s be accountable for those wrongdoings.”
Parallels with cricket
Fox said the financial planning community could learn about how to handle a crisis from the Australian Cricket Board and how it dealt with the death of the cricketer Philip Hughes.
“The ACB has strengthened its brand enormously, not to take advantage of Phil Hughes passing away, but by the way they dealt with a crisis in an open, honest and transparent way,” Fox said.
“They handled the whole thing with empathy, understanding, honesty and timeliness. That’s how you handle a crisis. And I would encourage all of the leaders in financial services that if they face a crisis – a crisis of advice, a crisis of product failure – whatever it is – own up to it, grab it, and build your brand off how you deal with the wrong doing, rather than let your brad fall apart because you take too long.”
Fox said that to fix the issues facing financial planning, practitioners have to “see through the noise”.
“At the moment it’s very easy to react to the headlines, to noise, around what all the issues are,” he said.
“I think if we’re going to deal with the real issues, then the advice market is going to need resiliency.
“They’re still going to wear the criticism for some things, and that’s because bad news sells. So we need to be prepared to deal with the things that we really need to fix, but wear outside criticism from those that don’t rally understand the deep issues.”
Not financial advice failures
Fox said that financial planners “mustn’t take the rap for things that are not financial advice failures”.
“A product failure is a product failure, not a financial adviser failure,” Fox said.
“Perhaps the ASIC product intervention powers are a good step in the right direction to start to deal with that.
“At the moment we’re involved in the Life Insurance Advice Working Group [LIAWG] with the FSC [the Financial Services Council] – the Trowbridge report. This is about dealing with the real issues. It’s about attributing the causes [of poor advice] in ASIC’s report appropriately, and sharing the solution.
“But it is important that advisers no longer take the rap for everything that goes wrong to do with a financial advice product or service; only should they own those that they are responsible for.”
Better at telling good news
Fox said the industry needed to get better at telling the good news about what it does.
“I was under the impression when I started eight or nine years ago that we were storytellers,” he said.
“Financial advisers were great storytellers. They could highlight your situation through the story of a client they’d already solved the problem for. They’d share a story; you’d see how it relates to you, and you’d take action.
“At the moment, we’re perhaps not telling the story of financial advice well enough. It’s either that, or not reaching the audience. We need to learn and relearn how to tell the story of financial advice. And if bad news sells, maybe we need to change the context in which we tell the good stories, about how they prevented or solved a bad situation that someone was in.”
Fox said that in the past five years about 13 per cent of advisers – 2300 individuals – had exited the industry. He said it was “really important for Australia that we reverse that trend, because the growth in the need for advice the demand for advice, is going to outstrip the number of advisers able to provide it”
“That’s why we have to face the real issues, and the real issues can be brought down to three essential groupings,” he said.
“The first is about advice quality, or the technical component. The second is about the adviser’s quality – the person, the individual. And the third is what we do about telling the real story about financial advice.”
Ethics is hard to teach
Fox said the issue of adviser ethics was “an area where so many people want to speak about it and want to talk about how we train it into people, yet it’s very difficult to train it into people”.
“It’s very difficult to train ethics into someone,” he said.
“You can help them understand the line; you can help them with decision making frameworks; but a good person will normally be a good person.”
Fox said that to address the major issues “we’re going to need strong leadership”.
“We’re going to need to build on the grassroots of relationships of the adviser with their clients,” he said.
“We need to take accountability for the past wrongs; and we need true consistency of quality behaviour by individuals.
“If we nail all those four things, it’s a matter of time before we re-earn a reputation that is aligned to those that we give now to accountants, lawyers and doctors.
“The reality is the future for financial advice is as strong as it ever was.
“Demand is through the roof. What we’ve got to do is get on with the job of providing great advice and give it the time to re-earn the reputation.”
