Letting go of the baggage
The move by the Association of Financial Advisers (AFA) to not support the Financial Planning Association’s (FPA’s) proposal to transition away from commissions-based financial advice would have come as little surprise to FPA chief executive Jo-Anne Bloch.
In disagreeing with the FPA’s consultation paper proposing the move away from commissions, AFA national president Jim Taggart asserted that members did not want nor expect their professional body to tell them how to run their businesses.
Many members of the FPA will probably find themselves agreeing with Taggart. Indeed, in all likelihood, a number of those members will see fit to resign their membership of the FPA and sign up with the AFA.
But while Taggart may have spoken the very words that some FPA members have been thinking, he and his board are clearly viewing the AFA’s role as that of a traditional industry association rather than a professional body.
The FPA’s approach is more about being a professional association. Very much tied up in the FPA’s position on commissions is an acknowledgement that advice needs to be clearly separated from product sales before advisers can be seen to be truly independent and therefore lay claim to professionalism.
Therefore, as the debate moves forward, financial advisers will need to make a choice about how they perceive the future of their industry and, by definition, how their industry is perceived by consumers.
What needs to be understood by all concerned in the debate is the reality that the Federal Government was highly likely to have moved on the commissions issue if the industry had not.
It ought follow, therefore, that while changing industry organisations might give planners some small satisfaction, it is unlikely to alter the reality that the commissions regime, as it currently exists, is not politically sustainable.
The financial planning industry, as it is now constructed, is carrying with it a good deal of negative baggage. For better or worse, a change to the commissions regime represents a chance to jettison some of that baggage and the perceptions that go with it.
— Mike Taylor
AUTHOR
Mike Taylor
Recommended for you
In this episode of Relative Return Insider, host Keith Ford and AMP chief economist Shane Oliver discuss the Reserve Bank of Australia’s cautious stance in response to persistent inflation, subdued growth prospects, and political shifts affecting the nation’s journey towards net zero emissions.
In this episode of Relative Return, host Laura Dew speaks with Rachel White, head of financial adviser services at Vanguard about how advisers can help Australians to feel confident in retirement.
In this episode of Relative Return Insider, host Keith Ford and AMP deputy chief economist Diana Mousina take a look at the Reserve Bank’s unanimous decision to leave rates on hold on Melbourne Cup Day and whether future cuts are still on the cards.
In this episode of Relative Return Insider, host Keith Ford and AMP deputy chief economist Diana Mousina break down the spike in inflation numbers and what it means for the possibility of a rate cut as we move into the new year.
