As long as the industry remains structured the way it is, and as long as financial planners cop being the patsies for the industry, financial planners will have no power, cannot be professional, nor can they put pen to paper to promote their plight. They will continue to be pinged.
Currently an adviser is facing a banning order. Why? My understanding is that he was unhappy with the standard of the financial services guide and statement of advice (SOA) templates his licensee (dealer) was providing. In frustration with his licensee he complained to ASIC. At the same time he co-authored an article in a trade magazine challenging how ASIC’s SOA requirements did not make them that client friendly.
The outcome is that now ASIC is trying to ban the planner for sub-standard SOAs and trying to prove his recalcitrance with the challenging views he put in the article he co-authored.
So back to my four Ps – power, professionalism, the pen and being pinged.
Why do I say planners have no power? Who decides what products and services a planner can use? Who decides which fund managers and other suppliers present at professional development days and conferences? These questions could also be addressed to small licensees.
Who provides most of the technical information in the industry? Is it the FPA? Is it some other independent technical or research establishment? Can the individual planner really stand up to ASIC? Why does ASIC go the individual planner when their licensee is supposed to be entirely responsible and liable for their conduct?
We all know that financial planning was established to be the distribution channel for fund managers – and a very efficient one (from the fund managers’ perspective). Why is this still so? Do the fund managers still have the power? Are the institutions gaining more power?
So to professionalism. How can a person be regarded as a professional if they are not the master of their own destiny? What are you if you have no power?
Professionalism has nothing to do with fees or commissions, or expressing fees as a percentage of the value, for example, architects. But can you call yourself a professional if you are paid by the supplier? Can you call yourself a professional when the supplier, in effect, controls what you do?
As long as planners are the subservient distributors of fund managers products (including platforms), how can they call themselves, and be regarded as, professionals? How can their association be a professional body when anyone can be a member – including me?
Without power, without professionalism, how can a planner expect to be heard? How many try the pen to challenge their position? How can they, when they fear the retribution of ASIC, the disfavour of fund managers, and the disapprobation of their peers.
There have been two recurring themes in my articles this year. One has been about how I think our industry is on the verge of significant changes. The other has been about how financial planners should stop being the patsies for all of the faults of the financial services industry.
It’s hard not to be a patsy if you have no power, no way to be professional and are afraid to use the pen. But unless planners do stand up, they will not only continue to be the patsies, but lose out altogether with the changes about to best the industry.
Superannuation funds and accountants will take over from today’s financial planners, unless today’s planners find a way to unshackle themselves from fund managers and institutions. The superannuation funds have the clients’ money and the accountants have the professional standing.
The superannuation funds will more and more have their own planners and most will be in call centres. Some already do and they are finding the model very successful as this model works for 80 per cent of their clients. For the client who has the more complex needs the accountant will provide the solution.
Some, even many, may disagree with my views. There may be other ways the future may evolve. One extension would be the return of the agent, which I have argued in earlier articles should happen. And this might be what happens to today’s planners – they revert to being agents and remain the distribution channel for fund mangers and institutions.
Whatever, the future will be different; today’s model is too flawed. Planners, who want to be professionals, will have to obtain the power to gain their professionalism to exert their authority. And, as the old saying goes, the pen is mightier than the sword. So stop being pinged.
