Combating financial planning's perception problem

Although the negative perception that consumers have of financial planners is largely due to the rhetoric of Industry Super Network, the planning industry must continue to strive towards professionalism, writes Mike Taylor.

Many financial planners will be disturbed by this month’s Roy Morgan Research survey which found that when compared to doctors, dentists and even accountants, consumers do not hold planners in particularly high professional esteem.

However, the Roy Morgan Research findings need to be viewed in the context in which the underlying data was gathered: a broad assessment of consumer sentiment with respect to superannuation.

In other words, the views of people about financial planners were gathered in the context of superannuation — arguably an environment that has been heavily influenced by nearly a decade of negative rhetoric from the Industry Super Network (ISN), and broadly underpinned by the negative perceptions of daily newspapers and television.

Two things should be drawn from the Roy Morgan findings. The first is that the negative campaign undertaken by the ISN may have been directed at commission-based remuneration, but it has served to undermine public perceptions of financial planners.

The second is that the industry has not done enough to counter the negative perceptions.

However, before aggrieved planners begin complaining too loudly about being targeted by the industry funds, they must recognise the impact of disasters such as the collapse of Storm Financial, Westpoint and Fincorp.

The problem for the Australian financial planning industry is that the negative implications contained in many of the industry superannuation fund advertisements are validated by the reality of the number of high-profile collapses that have occurred over the past half decade — and the manner in which planners and planning practices have been linked to those collapses.

Then, too, there remain the low barriers to entry and the fact that almost anyone can spruik their financial expertise, write books and hold seminars wherein they canvass investment formulas which may or may not have any basis in reality. Charlatans and carpet-baggers abound.

The problem for the financial planning industry is that you need a doctorate in medicine to be entitled to use the term ‘medical practitioner’ but no such tertiary threshold, patent or copyright applies to the use of the term ‘financial planner’.

In these circumstances it is little wonder that the industry struggles against ongoing negative perceptions.

Indeed it is a measure of how much further the financial planning industry has to progress to become a profession that a surgeon can be tried for murder and doctors suspended from practice with no perceptible diminution in public regard for the medical profession, but the collapse of just one small dealer group can see the planning industry wearing the opprobrium for years.