Point of View – All signs show we can party like it’s 1999

As we are still in the first month of a new year, it’s appropriate to wish all financial planners a happy and prosperous 1999. However, recent evidence suggests that such good wishes will prove unnecessary.

The Sydney Morning Herald recently ran a recruitment feature on career opportunities for financial planners. The story quoted a number of industry leaders who all said there will be continuing and increasing demand during 1999 for qualified people to join the financial planning sector. This is a good sign that the profession expects strong growth for some time to come.

Another good sign was the salary levels quoted in the story. These started at a minimum of $35,000 for a paraplanner, while principals can expect as much as $500,000 per year. These should attract the quality people the profession needs to satisfy the expanding needs of its clients and continue to grow.

Is such confidence justified? Our research says it is and points to a change in the issues that cause planners concern.

At the end of 1997, fee income and cut-price brokers were top of planners' minds (33 per cent), with the economic outlook (28 per cent), low level of savings (27 per cent) and over regulation (26per cent) not far behind.

One year later, planners were no longer so preoccupied with any of these.

Instead they are most concerned about compliance (24 per cent) and the volatility of the economy (14 per cent). The impact of GST and the state of world economies were also mentioned in 1998 but not at all in 1997.

And the very healthy sign is that fees and remuneration, combined with cut price competition, are not exercising the minds of planners so much these days. These issues fell from 33 per cent in 1997 to just 9 per cent 12 months later.

My own dealings with planners suggest the mood is much more one of: "if we add value there is a big market for us, so let's concentrate on our clients". Such attitudes are reflected in the survey responses already quoted.

Another big change indicating a new and more professional business approach by financial planners is access to the Internet. At the beginning of 1998 only 61 per cent of planners surveyed said they had it, but a year later that had risen one-third to 82 per cent.

So instead of being concerned about the Internet's potential to lure investors into dealing direct, planners are surfing it themselves. Anecdotal evidence suggests that such research is being turned into even better plans and advice for their clients.

And our survey at the end of 1998 of attitudes to investment amongst working Australians aged over 30 showed that the image of financial planners is improving dramatically. Planners rated first in genuine concern for respondents' interests (37 per cent); objectivity and professionalism (43 per cent); and whom respondents would ask for superannuation advice (31 per cent).

And in each category, planners rated a long way ahead of solicitors and banks, and either slightly ahead of or level with accountants on almost all counts. Earlier surveys told quite a different story, when financial planners did not rate nearly as well in every category.

So at a time to wish planners a happy and prosperous 1999, all the omens say that such an outcome is very much on the cards.

<I>Gerard Doherty is general manager of retail business, Perpetual Funds Management.