Sherry toasts efforts of financial planners

The Minister for Superannuation and Corporate Law, Senator Nick Sherry, has commended financial planners for their role in managing client responses to the current financial turmoil and for being the voice of stability in an unstable environment.

Sherry told Money Management that Australian financial planners have acted responsibly by cautioning their clients against “knee-jerk” reactions to the current market turmoil.

“I know financial planners have continued to stress [to their clients] long-term diversification [and] being careful and cautious about knee-jerk reactions, and I think they’ve been right in that general message,” he said.

Sherry said he was conscious of the difficulties financial planners face in managing the emotions and responses of a community of investors who are concerned and worried about the current investment market.

“I do know that it’s been difficult, particularly in the last three or four weeks, to maintain that message,” Sherry said.

“I think they’ve conveyed the correct and responsible general message in the current climate,” he added.

Given the current conditions, Sherry said long-term investor confidence in the area of superannuation was “a worry” for planners because of possible client responses. He also said maintaining a distinction between a long-term and a short-term focus in superannuation among clients was a concern.

“We’ve got a lower share market and significant volatility, and that’s causing a lot of concern and worry in the community.”

Sherry said that he had recently finalised work on “improved supervision” of credit ratings agencies (CRA) and research houses. He said the outcome of the review of research houses and CRAs would be released this week, but declined to provide any details prior to the publication of the official report.

“Our financial regulatory system is strong, but wherever we can make it stronger, we are making it stronger,” Sherry said.

“I am certainly aware that planners have a deep interest in the way in which research houses carry out their analysis, because it directly impacts on the ability of planners to deliver advice around the products on which research houses conduct analysis.

“Planners are reliant to varying degrees on the analysis of research houses, and I’ve always held a general view, particularly since the Westpoint debacle, that this is one area that requires improvement,” he said.

Beyond looking at structured and securitised products, there were no other products or areas currently needing investigation in terms of regulation, Sherry said.