IFSA – Where will you be on July 1, 2000?

Most Australians you speak to today are focussed on one, or both, of two upcoming events: New Year’s Eve and the Olympics. But for those of us who work in the financial services industry, 1 July 2000 is rapidly becoming the focus.

But first, 31 December 1999…

With about 38 weeks left until 31 December, many peoples' thoughts are beginning to focus on where and how they will spend the biggest party mankind has held. For those of us in the financial services industry, however, the night will feature an extra added bit of excitement, that may distract us all from the fireworks momentarily.

Having spoken so frequently over the past year about the Millenium Bug, the phrase "Y2k" now seems to roll off the tongue all too easily, as if it's nothing at all. As an industry, we have invested significant sums and man-hours in preparing for the event, so that no fireworks occur at all. And given that Australia is probably one of the better prepared countries, we will probably all be able to toast the new decade without a hiccup.

Having said that, we must now start to focus our efforts on providing sensible and practical information about Y2k to our investors. The media, as expected, seems to be doing its best to work up a scare, making mountains out of molehills and drumming up panic wherever it can. No doubt, as December approaches, there will be a plethora of made-for-television movies on the subject, replacing Hollywood's meteor collision frenzy of last year, and the 1980/90's post-holocaust fascination. Therefore, it falls to the investment management industry, financial advisers, and organisations such as IFSA, to provide balanced views of the issue.

The reporting to the ASX and the regulators is certainly contributing to keeping the facts, not the fantasy, at the forefront so far. Now we need to pro-actively remind our customers that investing is a long-term activity with many and varied risks along the way - Y2k being just one of them.

Ensuring investors have a portfolio that is appropriate to their long term risk profile is our bread and butter, not just on 31 December, but each and every day, year in and year out. Investors need to be reminded of the costs and risks of making short-term decisions, whether trying to avoid Y2k or the next October 1987.

In recent years, record volumes and significant price volatility have challenged the automated systems which now dominate the industry. But, our capital markets have withstood these stresses on capacity and past problems have been corrected quickly.

With good, solid and appropriate advice, investors should act rationally on the night, and we can reap the benefits of the investment we've all made in rectification, and sit back and enjoy our party.

For those of us in the financial services industry, the new millenium starts on 1 July 2000, with the commencement of the GST, the new business tax regime, and CLERP 6. And just because that's not enough to keep us all busy, it may well be that fund choice will be postponed from its current start date to 1 July 2000, as well!

Just as people will need to find a new name for the approaching new decade (what do you call it anyway? The twenty-hundreds? The double zeros? The noughts?), the industry will start to think of 1 July 2000 as the "Big Bang, Armageddon, and the new Millenium" all rolled into one.

Start thinking now about where to hold the party.

Lynn Ralph is chief executive officer at Investment and Financial Services Association.