An open letter to FPA chief Ken Breakspear

Ken Breakspear took up the top job at the Financial Planning Association (FPA) less than a month ago. But as most politicians know, the honeymoon period does not last long. Tom Collins presents his wish list for the FPA as an open letter for the new chief executive.

Dear Ken,

Congratulations! I wish you well. Nearly two years ago I wrote an open letter to your predecessor. There has been some progress since then. The Financial Planning Association (FPA) seems to be less obsessed with the Certified Financial Planner (CFP) designation and, in spite of its management problems, has recruited some good professional staff.

However, now I am writing an open letter to you, as unfortunately many of the issues facing the FPA when I wrote the first letter are still issues - plus there are some new ones. The two key issues I would like to start with are communication and strategic direction.

Ken, the FPA does a lot of fine work but it doesn't tell its members about it as much as it should. Maybe some of the effort that goes into external communication should go into communicating with the members.

I don't know whether FPA people are just too busy or if they don't understand the need. I don't mean that unkindly, nor this next statement either, but the FPA attracts staff that are task orientated (which it should). These type of people often see communication and member involvement as a hindrance or distraction to the task in hand.

From this emanates the top down culture that permeates the FPA. It is easier to "just do the job, get a result and then get onto the next task".

Unfortunately associations don't flourish with that culture. Members don't feel they are involved, they don't know what is going on, and they end up believing that the association is doing nothing for them.

In saying all of this, I am aware and supportive of the work being done by the key committees. But once again this is a select group of very busy people who give generously of their time. This is critical, but it is not involving the members nor communicating with the members.

The current structure is such that these committees develop policy that is then considered by the board. A part of this process is that these committees are supposed to keep the chapter committees informed so that they can contribute to the development of policy. I have been on the Sydney chapter committee for a number of years and am currently entering into my second year as chair. I cannot recollect when (but there must have been some occasions) the chapter committee has been provided with a policy paper that they could discuss and then provide input to the board.

Ken, I can already hear people saying: "Why is Collins raising this in public, in his column - why doesn't he raise it within the proper channels within the FPA".

My answer is in two parts. Firstly, I have and secondly, I want the FPA to do more publicly to involve the membership. Do less behind closed doors. Be bottom up not top down.

To me, the FPA chapters are the most important asset the FPA has, but for some time now they have been under-utilised and, to some degree, seen as outposts that can do the bidding of head office when required. Maybe a bit harsh, but sometimes hyperbole is necessary.

My suggestions are that a senior person in head office should be responsible for ensuring that chapters can play their proper role in the development of policy. I am not talking about an administration person, nor one of the staff in the policy development areas, but maybe someone senior from the marketing/ public relations area. Someone who understands and appreciates the importance of communicating with the chapters and members.

Two, the FPA should appoint one or two business development managers (BDMs) whose job it would be to visit the chapters on a regular basis to help them in their local area. These people shouldn't even have a desk in head office - they should be on the road all the time.

For the past few years, because of the management issues, many people seem to believe that the FPA has lacked strategic direction. No wonder, given all the bushfires that have been had to be fought. (This comment is not meant as any reflection on chairman Ray Griffin - who would have had his job over the past 12 months?) However, it desperately needs direction now. The Financial Services Reform Bill (FSRB), alienation of income, education, commission attacks are all key matters that need immediate and strategic responses.

Ken, a number of these matters really bring into focus questions about what is the FPA, what is its role, where should it concentrate its finite resources. I think I know the FPA, and you need help.

Just as many people are advising financial planners to seek external help to cope with the changes within and outside their business, the FPA should seek external help. I'm not talking about McKinseys, but someone who can help it develop its strategic direction. It has be someone from outside, someone who can objectively, dispassionately help the FPA.

Related to this are the following matters that the FPA should be discussing with its members. Maybe the chapters should be having town hall style meetings about them. These include distribution representation, education, designations and commissions.

Without counting the accounting associations (three at least), there are six associations representing distributors of financial services. The manufactures got their act together with IFSA, why can't we? Are we still being precious about life agents - surely it is better to have them in the camp. The public doesn't discriminate and we have the same regulator and soon the same licensing provisions.

Why isn't the FPA a registered training organization (RTO)? How long can the FPA hang on to the Diploma of Financial Planning (DFP)? The cash cow will dry up one day - so why not be proactive about it. Why not accredit other providers for the full course - this would benefit members. Why not develop and accredit specialist courses (eg insurance, super, investments etc)? How can half a unit on risk insurance be enough to give competent advice on insurance?

As I have argued before, the CFP is in danger of becoming elegantly irrelevant, unless the FPA allows other distribution associations access to it. Also it is a generalist's designation (like GP) so we need designations or some way to recognise specialities. In the USA, the CFA (Chartered Financial Analyst) is the becoming the designation to have if you want to be recognised as an investment guru.

Further, the FPA should re-consider who it regards as practitioners, especially in light of IPS 146. It seem silly and precious to only recognise CFPs as practitioners and lump the other advisers in with affiliates (or whatever I'm called).

Finally, Ken, commissions vs fees. It is time the FPA took the high ground. We have had some lazy journalists and some self serving fringe dwellers hopping onto a populist bandwagon (shades of Pauline Hanson).

These scaremongers seem to forget that many people, including professionals, work on a commission basis. Architects, investment bankers, brokers, banks with their currency transactions, real estate agents, auction houses, placement firms - need I go on.

The FPA in promoting its disclosure vs regulation position should argue that we believe the client should have choice. The client can choose, after disclosure, between a fee or a commission. What is fairer? This choice is a positive not a negative - the client, the consumer is deciding how they want to pay.

However soft dollar commissions are a different issue. This is an area, even with disclosure, the FPA should be developing some guidelines on what is appropriate. Even where an adviser has been lavishly entertained, or taken on a junket, they can stop supporting the provider of the largess at any time without any future consequences. But where rewards are tied to options or the future success of the provider, advisers are in danger of putting themselves in an untenable situation. If they stop supporting the provider, this could impact on the value of the future benefit. Once again this is an issue on which the FPA should be encouraging wide debate.

Ken, you, probably more than anyone, know the strengths and weaknesses of the FPA, so this letter of mine might appear to be a bit presumptuous. But, as you know, I earnestly believe that the FPA needs to be bottom up organisation if it is going to meet the needs of its members and be seen to be relevant to them. There is already competition for them. Many would hate to see the FPA, which was formed by vibrant far-sighted people, become a victim of its own success, stultified by people wanting to protect the status quo. Ken, be brave!