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Professional Investment Services (PIS) chief executive Robbie Bennetts has entered into the industry versus retail funds debate, questioning industry funds’ criticism of fees and commissions and their own campaign funding.
Following on from debate at a recent PIS conference in Kuala Lumpur, where advisers urged for a lobbying program to combat advertising campaigns being run by industry funds, Bennetts said the value of advice needs to be pushed more.
“They put up this argument of commissions and fees versus ‘I don’t pay for anything’, and I think that’s just a very dangerous precedent,” he said.
“The way this campaign runs, ‘I don’t pay any commissions to financial advisers’, etc, I think the value of advice and even going back to the [Financial Planning Association] value of advice campaign … needs to be sold harder, that there is actually very good value in having advice.
“I’d be cynical enough to turn around and say, ‘What about those people [who] thought they’d have a direct stock portfolio, they went and bought ABC Child Care, they bought Centro property, they bought Allco Finance …?
“And they bought all those direct stocks, whether it be through a stockbroker or however they went and purchased those things and, you know, that to me is not getting advice,” Bennetts said.
“So this whole scare campaign about don’t go and pay a fee or a commission to a financial planner, I don’t believe it’s … necessarily representing the best interest of the client.”
Richard Klipin, chief executive of the Association of Financial Advisers (AFA), who spoke at the PIS conference about the AFA’s view of what the role of the adviser is, said the AFA wouldn’t be participating in an active lobby against the industry funds’ campaigns, arguing that the strategy should focus on identifying what advisers do.
“[Let’s identify the advice advisers provide that do good things] for their clients, and let the market determine what they want to do.”
He added that the AFA was not in a position to spend millions of dollars on broad advertising, “But there’s certainly lots of ways we can influence the marketplace”.
Noting that we have a free and open market, Klipin said, “If people want industry funds, they’re absolutely entitled to head that way. If they want bespoke, tailored advice for their particular needs, they’ll go and see an adviser.
“So there’s a lot of beat-up on trying to create the black and white differences, but there’s a lot more grey in the debate.”
Klipin said the AFA has invited David Whitely of industry funds to join a debate at their conference later this year, because the views of the industry and retails sectors “aren’t that far apart”.
“It looks like they’re far apart, but when Australians get advice and when they get good advice, they’re in a strong position in their financial lives to do the things that they want to do. And there’s not too many people that disagree with that point of view,” Klipin said.
On whether professional bodies are doing enough to address these issues, Bennetts noted limitations in resources. “It’s very easy for someone like me to sit back and say, ‘Yes, they can be doing more’. Of course, everybody is limited by resources.”
Bennetts then questioned the funding of the campaigns being run by industry funds, including major sponsorships of sporting teams. He said the money would be coming from the members’ accounts.
“They try to make this big differentiation that people are paying fees against people that don’t pay fees. Where does all their money come from if they’re not actually charging us a fee? And I think that’s a question that the financial planning industry puts up to them all the time,” he said.
“Of course they’re charging, but the way they make out that they don’t, I just find that a little bit scurrilous. It’s a bit questionable, everyone’s going to have their opinion on that.”
