Words shouldn’t fail us: FPA chief
MM: You have been in the seat for eight months and there is always criticism of industry groups, but do you think the FinancialPlanning Association (FPA) is doing its job in terms of representing constituents?
JB: I think the FPA is doing an awful lot that isn’t necessarily seen by all its members. I think the fault is with the FPA not having communicated strongly enough what the board strategy is and what we have been doing.
We do have a diverse membership, there’s no doubt about that, but I think that is a strength because I think financial planning is diverse. You have planners all around the country at different ends of the spectrum. I think what we need to do is communicate in a more focused way to those sort of groups and then work with them on how we can better represent their interests.
We have a member survey — we are anxiously awaiting the results — and we will be using that to help us understand what our members want of us. Where they mark us well. Where they think we have some way to go. And then we will work to understand the various segments in our membership and target services far more specifically so that we do meet their needs.
In terms of board strategy it is actually very clear, but I’m not sure people would understand it.
It is focused around delivering member services, around developing financial planning as a profession and around getting strong representation to our key stake-holders.
That has been around for a while, that is not new, but I think if you surveyed our members they could probably not discuss our strategy as clearly as I have communicated it.
In terms of communications we try to communicate as best as we can, but there are still a lot of members who feel we are not communicating as well as we can in terms of having them understand what we are doing.
MM: Do you feel the FPA should have a stronger presence in Canberra? Should it be a stronger lobbyist?
JB: There is a lot that’s being done. When you look at what has been achieved with anti-money laundering, for example, we were about to front the fact that advisers were going to be required to run a 100-point plan for people who walked into their office.
We have managed to work to move that to the draft bill, which now says that planners will have to do that at product time, which is much more reasonable.
If you look at what we did with the simplified super proposal in working towards extending the undeducted contribution — there are a number of things we do do quietly.
But you are absolutely right. The power, the strength, the future is debated in Canberra. So we need to be at the table, putting our views, representing our members, their interests and actively working in Canberra. And I might say in many state jurisdictions because there is a strong consumer protection/payroll element as well.
As far as financial services reform is concerned and the next tranche of refinements, it is critical that we are at the table promoting the views of our members.
MM: Does that mean you will need to staff up?
JB: I see that is very much my role and it will depend on what the issues are whether we need to staff up or not.
But it is early days and we need to get the strategy on the table and decide what our priorities are.
MM: Are there too many organisations seeking to represent the financial services industry?
JB: That is a hard one if you want to avoid inherent conflict of interest. We represent the profession, the financial planning profession.
The planners and the licensee and I think we are seen as the pre-eminent body, certainly by Canberra and the regulators.
We do have the lion’s share of financial planning and that is what we need to be focused on. It is hard to see of the major associations what cross-over there might be.
It seems to me that if we can work towards getting more Australians to seek advice and then deliver quality advice it doesn’t matter how many organisations there are.
MM: Do you feel the Dazza campaign has been effective?
JB: It is not what I think. The figures speak for themselves.
It has been a very effective campaign as far as consumers are concerned. We have really good stats on this — something like 150,000 are now more likely to speak to a financial planner, 35 per cent penetration, which is fantastic.
What you have seen is phase one of a three-year campaign, so we are in the early days. But the objectives were awareness and just getting people to think about the value of advice and we have been very successful.
When the adverts are shown we get a great spike the next day on the find-a-planner web site, 70 per cent of those people downloaded the good advice brochure and so we are generating a lot of interest.
I am very committed to seeing Dazza through to fruition and we need to be mindful to deliver messages on the ground so that things like our Value of Advice Awards demonstrate that advice is for everyone and that it is not just about savings and super.
MM: There did seem to be some concern among financial planners that the industry funds were stealing a march and that the FPA was not counter-balancing?
JB: The industry funds campaign has been very frustrating to be honest because we do think that a lot of their assumptions are somewhat misleading and they denigrate the value of advice.
You embark on a campaign strategically and the most important thing is to demonstrate the value of advice.
Can I also say that industry funds have a place. They are products. So taking them head-on is probably not what we need to be doing. What we need to be doing is demonstrating the value of advice. We might need to explain — to say that no matter how you pay for advice this is what you get for it.
The unfortunate thing about the industry funds campaign is that it makes them look as if they’re anti-advice and that is something we have taken up with them — it looks like they are anti-advice and that is a shame.
MM: Is it difficult to come up with a way of demonstrating the value of advice?
JB: Our value of advice awards have gained good traction where you are giving real life examples of an adviser, a client and the sort of advice they have given and the benefits that have been generated — making it tangible giving real life examples.
How many people don’t know what financial planners really do. We are about to come out with a DVD that explains what advisers actually do and therefore why they should be paid.
MM: On commissions versus fees, what is the FPA’s position?
JB: Choice. The client should have choice. But that choice should be explained, it should be disclosed and clients should understand it. Our conflicts of interest principles require that the fee is clearly linked to advice provided.
The most important thing is the value of advice. If you believe in advice and you’re prepared to pay for it then you should see what your options are — fee, commission or both and then decide. And if you have any qualms then don’t proceed.
MM: To what degree can the financial services industry be self-governing?
JB: I don’t think it is an option. I don’t know that we’ve ever aspired to self-regulation.
I think what we need to aspire to is a co-regulatory model where the role of ASIC [the Australian Securities and Investments Commission] is clear in terms of its enforcement powers and then our powers in terms of professional conduct etcetera co-exist.
They do co-exist in the sense that when ASIC takes action against one of our members we need to review what that member has done.
We need a regulatory regime that works alongside ASIC’s powers.
We are very focused on professional standards. We need to do work in this area and progress what works for us, and we have some work to do to establish a professional framework that our members will support and work within.
MM: ASIC is very public in what they do but we don’t know when the FPA takes action. Would you more widely publicise what the FPA does as a communications exercise?
JB: I think our members would like us to do that. But can I just say we don’t have this huge list of action that needs to be taken.
We simply don’t have a huge number of complaints or disciplinary action that was required.
MM: An issue that is gaining a lot of discussion is succession planning. Is that something the FPA can help its members with?
JB: If our members wanted that then it is something we would look at. But it depends where it sits on a list of priorities.
I’m not averse to any ideas that strengthen services to members, but it is a question of whether they want it and what the priorities are.
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