When old scars still pain
The Financial Services Council (FSC) caused something of a stir in the financial services industry when, at its annual conference in Brisbane, it announced a policy discussion arrangement with the Industry Super Network.
A few short weeks later, the Industry Super Network (ISN) chief executive David Whiteley issued a statement urging financial advisers to recommend industry super funds, saying the decision should be based on their long-term net returns.
Whiteley then cited figures produced by SuperRatings, which he said showed industry super funds had outperformed retail funds by 1.67 percentage points over a rolling seven-year period, and 1.84 percentage points over a 10-year period.
None of this should have come as any surprise to financial planners because it represented much the same message Whiteley and the ISN had been pushing out to the media for most of the past six years.
Further, there is no dispute that industry superannuation funds can be said to have out-performed on a rolling seven-year average, albeit the same could not be said over a rolling four-year average.
What was important about Money Management’s report of Whiteley’s comments was the angry response it generated in the comments section of www.moneymanagement.com.au – comments so angry that some attracted the attention of Whiteley’s lawyers.
However, putting aside the robustness of some of the comments, the underlying message was that irrespective of the policy peace-pipe smoked by both Whiteley and FSC chief executive, John Brogden, there are many planners who are not prepared to forgive and forget the campaign waged by the ISN on commissions and the value of advice.
That campaign, which lasted the best part of five years – and is said to have cost industry super funds many millions of dollars – is widely regarded as having strongly influenced negative consumer attitudes towards financial planners.
In turn, the ISN is seen by most planners to have been influential in some of the most disliked elements of the former Labor Government’s Future of Financial Advice legislation.
FSC chief executive John Brogden was probably right when he explained to a recent Super Review roundtable that it was time to end the war with the industry funds in the interests of presenting a united front on superannuation policy, but in doing so he clearly underestimated the depth of feeling which remains among many planners.
Looked at from the perspective of aggrieved planners, the FSC appears to have acted in the interests of its major institutional members who, because of the pursuit of fund flows via mandates, have a vested interest in maintaining cordial relations with the industry funds.
Brogden may be right. The war may, indeed, be over, but many planners are not ready to either forgive or forget – and some are clearly hoping that a Coalition government will exact reparations.
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