A number of advisers and dealer group heads have expressed frustration at a perceived lack of support from the funds management industry in protecting advisers against deteriorating consumer confidence.
Professional Investment Holdings (PIH) managing director Grahame Evans said the major institutions had been “absent” in promoting the value of advice during recent scrutiny of the industry, a view supported by Fiducian managing director Indy Singh.
The perceived silence from the retail funds management industry was in stark contrast to the strength of the industry funds’ campaign to eradicate commissions, and the resulting reputational damage to advisers.
Singh questioned whether the lucrative commercial relationships between fund managers and industry funds were one explanation for the lack of response to criticisms made of advisers.
“They would never want to upset their industry fund, [which] provides them billions of dollars to manage,” Singh said.
Australian Unity, like many companies, has both an advice and funds management arm, and includes industry funds among its clients. Australian Unity general manager for personal financial services Steve Davis said fund managers found it challenging to back advisers too strongly in the commission debate “because some of their largest clients are industry funds”.
“[Fund managers] have a foot in both camps and I think they’ve just tried to stay out of the debate altogether,” Davis said.
Davis questioned the validity of the fund managers’ stance, saying consumer confidence in financial advisers had been lost as a result.
But Davis also believes the financial planning industry is not doing enough to promote the value of advice. The last large-scale advertising campaign waged by the advice industry was the ‘Don’t Ask Dazza’ campaign initiated by the Financial Planning Association (FPA) in 2005, which received a mixed response.
“‘Don’t Ask Dazza’ did more damage to the brand of financial planning than in any way enhancing it,” Davis said.
Instead, Davis said the behind-the-scenes campaign run by Colonial First State in 2008, ‘Industry Funds Myths Exposed’, which was delivered only to advisers, was the type of advertising campaign the financial planning industry should have released to the public.
Evans also acknowledged it was not just fund managers dropping the ball, pointing to the fact that while he encouraged PIS advisers to make submissions to the Ripoll Inquiry highlighting the value of advice, only one of his advisers responded.
MLC executive general manager of advice and marketing Richard Nunn said he was surprised “that there are dealer groups out there that are saying that [the institutions] haven’t done enough”.
“There’s a lot of change going on at the moment and it will be the institutions at the end of the day that end up supporting advisers through that process.”
The Financial Services Council, which represents both fund managers and the advice channels they own, declined to comment on the issue.
Meanwhile, FPA chief Mark Rantall fired a broadside at the media for its failure to run positive stories about financial planners, saying it was negative media coverage that was doing the most damage to the profession.
