Why financial planners must start to emphasise the value of advice

Financial planners may be upset with the major institutions for failing to counteract the negative campaign by the industry super funds, but now the focus must be on the value of advice, writes Mike Taylor.

There can be little doubt that Fiducian chief executive Indy Singh touched a nerve when he suggested that the major institutions had been less than vigorous in defending planners against industry funds.

Singh, like his fellow participant in a recent Money Management roundtable, Professional Investment Services managing director Grahame Evans, made clear he believed the major institutions had been absent from promoting the value of advice in the face of attacks from the industry superannuation funds.

Implicit in Singh and Evan’s comments were that the institutions had chosen to avoid full engagement in the battle because they had a commercial foot in either camp: on one side the selling of products to financial planners, and on the other the pursuit of multi-million dollar mandates from the industry funds.

What both Singh and Evans might have added is that while the institutions could be perceived as less than entirely vigorous in defending the planning industry, they proved positively wimpish in defending the merits of their own retail master trusts.

Such is the quantum of the money managed on behalf of industry funds.

Recently published comments have asserted that the industry funds have spent in the order of $120 million on television advertising that impacts the planning industry and the value of advice.

The combined marketing budget of the major financial services institutions far exceeds that figure, but little of it has been directed towards direct counter-punching.

While the marketing money provided by the industry funds has been channelled via Industry Funds Services, the Financial Planning Association (FPA) and now the Association of Financial Advisers (AFA) have had to raid their own coffers or pass the hat around.

The conflicts of interest inherent in the business models pursued by the major institutions have been recognised by many in the planning industry for years.

It is something that has given rise to arguments that the institutions should not be granted significant representation within groups such as the FPA or the AFA.

However, as much as the institutions might be accused of failing to meet the industry funds head-on, their financial strength has nonetheless often proved to be the lifeblood of the industry.

In truth, little purpose will be served by the financial planning industry seeking to counter-punch the industry funds. Rather, it should direct its resources towards promoting a common objective: the value of advice.

Notwithstanding their conflicted positions, the major institutions should have no trouble in anteing up to support a major campaign backing the value of good advice — indeed, some are already doing so.