Ground hog day

Mike Taylor writes that Financial Services Council chief executive, John Brogden used his last annual conference address to point to how little the big issues have changed in the past five years. 

When Financial Services Council (FSC) chief executive, John Brogden made his final final national conference address before stepping aside later this year, he reflected upon the harsh reality that many of the same issues which have confronted the industry throughout his five-year tenure are still the issues confronting the industry today. 

Those issues were Future of Financial Advice (FOFA) and Stronger Super. It would not have been lost on delegates at the conference that just a few hours earlier the Shadow Assistant Treasurer, Chris Bowen had said that the Australian Labor Party’s agenda with respect to both FOFA and superannuation were not dead and, notwithstanding legislative and regulatory changes implemented by the Abbott Government, would be substantially restored to their former glory when Labor next come to power. 

Bowen also suggested that on the next occasion a major financial services failure occurred there might well be a clamour for an even harsher approach than that encompassed in FOFA. 

Bowen’s words represented both good and bad news for financial planners. On the one hand they know Labor’s intentions and can model their business strategies accordingly; on the other hand they must worry about whether a new Labor Government will not only restore the old FOFA but, encouraged by the industry funds, take it a good deal further. 

Perhaps then, the answer lies in the financial planning industry closing ranks in the pursuit of a profession, with a panel session at the FSC conference suggesting that many of the differences and jealousies which might have precluded such an objective in 2007 do not exist today. 

That panel session involved AMP Financial Planning boss, Steve Helmich, BT Financial Group General Manager of Advice, Mark Spiers and Association of Financial Advisers (AFA) chief executive, Brad Fox. What became clearly obvious from the panel is that the financial advice sector sees achieving “profession” status as an absolute necessity. 

What is more, Fox argued strongly for industry-wide agreement and acceptance of designations capable of being understood by consumers, while BT’s Spiers argued strongly that if the industry wanted to be self-regulating then it would need to earn the right to do so via its actions - “the things we do, the way we do them and the way we behave”. 

“We need to inject a greater degree of transparency in what we do and how we act,” he said. 

The reality confronting the financial planning industry appears to be that it has a window of opportunity between now and the election of another Labor Government to put in place the necessary professional standards and mechanisms which would make an absolute return to the original FOFA legislation a redundant proposition. 

Not overtly mentioned at the FSC conference, but a significant elephant in the room was the fact that while the AFA and the Financial Planning Association (FPA) were represented at the FSC conference and were singing from much the same hymn sheet, there has been little combined policy-making or advocacy over the past six years, with FOFA having sometimes acted more as an inhibitor to cooperation than an encouragement. 

There was a time early on in Brogden’s stewardship of the FSC when it was suggested that he might succeed in making it an umbrella body for the various elements of the financial services industry. Those suggestions never moved past a general discussion but, at much the same time, there was debate about the FPA and AFA joining forces. 

At last week’s FSC conference, a number of senior executives in the financial planning industry privately indicated to Money Management that they still believed the greater interests of the industry would be served by a merger of the AFA and FPA, albeit almost to a man they believed, both personalities and politics would  preclude such an outcome. 

However, having experienced what can go wrong when an industry fails to speak with a single voice during FOFA, and with Chris Bowen foreshadowing a return to the old regime, there are plenty of reasons for the creation of a united approach. 

In the meantime, with Brogden’s departure as CEO, the aspirations of some members of the FSC board to see it gain greater influence will have to reside in the hands of his successor, to be announced later this year.