Build it and they will come

In an address to the Financial Planning Association’s 2005 national conference, the chairman of Coca Cola Amatil and Chancellor of the University of New South Wales, David Gonski, passed on some salutary words about financial planners before moving to speak on philanthropy:

“While people might be prepared to put up with a less than perfect shoe repairer or a sloppy plumber, when it comes to management of their savings and income, even the slightest whiff of corrupt behaviour draws attention like a magnet.

“Given the nature of the services you offer, the financial planning industry will always be under close scrutiny — by government, regulators, by present and potential clients, by the media and the public. That will never go away.”

It was with these comments and others like it in mind that I considered a recent E-mail that arrived from a very large financial institution. What struck me about the E-mail was the language used both in the subject line and the text. In large, unashamed, bold type the message claimed that by attending a forthcoming workshop advisers would make ‘more sales’ and ‘more income’.

It was the language of selling and products and in no way did it match the discourse one might otherwise associate with a profession. The overall tone of the message was one of sales, and by derivation a language where advisers’ interests come first.

The thing about the E-mail is that it read like it was straight out of the 1980s. It read as if the institution cannot move on from an era of overt product flogging when the cultural overtones of selling and products simply outgunned early efforts to see financial planning recognised as a distinct profession.

In his presentation at the conference, Gonski went on to say: “In your shoes what I think I would be thinking of is first, how to build trust in a well-educated and cynical society. We all know that reputation is all.”

Also in 2005, The Argyle Partnership’s Christina Kalantzis wrote in a Money Management article: “Ensure that your business has a culture for embracing compliance. A strong compliance culture is set by example from the top of the organisation, for instance, the principal or senior financial planner.”

Arguably, it is the leaders of financial planning businesses, large and small, who should also be leading a change away from a culture of sales and products to a culture of true professionalism. Until business leaders change, community perceptions will not change.

Australian financial planning is in need of cultural leaders from the big end of town who will lead and mentor their whole organisation, with particular emphasis on their front line representatives, through a cultural change where sales and products are a distant second to advice and ongoing service.

Such leaders should be people who are brave enough to step forward and lead from the front on changing the culture of financial planning.

These people should be prepared to break ranks and lead in helping to change community perceptions that financial planning’s culture is all about selling products.

That means rethinking every aspect about how an organisation presents itself to clients, staff, shareholders and the community at large.

It means changing from the insidious language of sales and products to a much more professional discourse.

It also means under-promising on returns and over-delivering on the ongoing service. After all, if for no other reason, in 2007 and beyond the radar of ‘a well-educated and cynical society’ is increasingly able to detect a ‘sales pitch’ well in advance.

For many, it will be anathema to think in an atmosphere liberated from the language of selling but where service and really connecting professionally and, at times, emotionally with clients is the way business is conducted.

It also means discarding the practises of rewarding advisers and their managers with bonuses and soft dollar commissions for achieving sales targets. Such change will not come easy to many and so it needs to be led from the top — the very top — of organisations.

In 2007, any attempts to argue that financial planning’s problems are unrelated to cultural issues are redundant.

If anyone needs more evidence of the extent to which cultural problems can affect an organisation, witness the degree to which self-interest and organisational cultural issues were cited by auditors as being central to the corporate governance problems exposed at the National Australia Bank in 2004.

Tomorrow’s financial planning leaders will need to be strong and visionary individuals who truly believe that changing their organisations’ cultures will deliver serious and sustainable long-term business benefits.

They will need sufficient courage to lead the withdrawal from the sales race while their organisations build respected reputations for professional service that is untarnished by sales and products.

They will be people with the confidence to trust in the process that funds under management, revenue and profit will be delivered far more cost effectively in time as the reputation and trustworthiness of their organisations grow. They will value their own good name and that of their business — these people will truly understand that reputation is everything.

As ‘corny’ as it may sound, the line in the fanciful Kevin Costner baseball film, Field of Dreams, ‘build it and they will come’, is entirely relevant to financial planning.

From the smallest portfolio to multi-million dollar private client service offerings, the community really only expects one thing of financial planners. That expectation is not that all financial planners should be infallible financial gurus but rather that they are entirely trustworthy.

When the millions of Australians yet to consult with a financial planner get to know and trust that dealing with any financial planner means the client’s interests rank ahead of the planner’s, then they will come — and make no mistake, they will come en masse.

Such an outcome will see school and university leavers instinctively seeking out a financial planner when they first start working. It will mean that their parents have imprinted on them the benefits of planning financially from an early stage in their working life and also that financial planners are trustworthy.

For the time being, Gonski is right to say that financial planning will always be under close scrutiny by governments, regulators and potential clients, by the media and the public.

However, I live in hope that one day veteran financial planners will be able to recall the ‘old days’ when all and sundry wanted to rake over the entrails of their every action as they went about their business. Such reminiscing will simply mean that financial planners have ascended to the elite group of professionals whom the community trusts, instinctively.

At the end of the day, regardless of how many clients and how much funds under management financial planners can boast about, they have nothing if the community loses trust in them. Financial planning has enjoyed enormous growth in recent years due to the twin effects of the superannuation legislative impetus and barnstorming domestic markets.

Do you dare to imagine how much bigger and better it would be if there wasn’t ‘even the slightest whiff of corrupt behaviour’?

Ray Griffin CFP is the managing director and a representative of Griffin Financial Services.