The Australian financial planning industry is a diverse organism not well understood by the media and other industry outsiders. Planners and other industry participants need to remember this.
Thus, a story published in Money Management late last month quoting Hunts’ Group director, Anthony Hunt, suggesting people are more concerned about stability and security than a planner’s independence, should have been recognised for what it was – a statement of the bleeding obvious.
What Hunt was saying was that in a time of economic uncertainty, consumers tend to gravitate towards well-recognised brands which carry with them the aura of stability. In Australia the dominant brands are the major banks and AMP.
Nor does it seem to matter to consumers that planners employed by the major banks and AMP will seek to sell them products manufactured by their employers.
Both the anecdotal evidence and various pieces of research suggest most consumers would be surprised if this were not the case.
The bottom line for these consumers is that while they might not be getting the best possible product and the best possible deal from the major institutions, they are at least dealing with a commercial entity they believe has pockets deep enough to fully compensate them if things go badly awry.
Planners need to recognise this reality before they embark on sometimes acrimonious and damaging debates about the comparative merits of dealing with “independent” planners and those aligned to the major banks and institutions.
A Certified Financial Planner (CFP) working for Commonwealth Financial Planning, MLC or AMP ought to be no less well regarded than a CFP working for one of the non-aligned dealer groups.
Putting aside the origins of particular products, it should be the quality of the advice that matters, nothing more, nothing less.
Indeed, while it is true that the Future of Financial Advice changes have led to further vertical integration within the industry, it must also be remembered that the changes are intended to create greater separation between product and advice.
Those who engage in debates about the relative merits of “independent” and bank-aligned planners need to reflect upon how their arguments appear to the general public, and whether anyone other than planners themselves really cares about such distinctions.
The truth is that few members of the public give a fig about who their planners are employed by. What they care about is the quality of the person they are dealing with and the quality of the advice that is ultimately delivered.
It is a simple fact of life and human nature that people will gravitate towards the familiarity of big brands in volatile times.
It serves no one’s interests to have some planners disparaging those choices.
