The financial advice community is divided on the Financial Planning Association’s (FPA) soon to be released principles on conflicts of interest, displaying mixed opinions on the appropriateness and likely effect the principles will have on public perceptions of the industry.
While many advisers and financial planning support staff consider the principles — which were released in draft form at the FPA’s national conference last November — to be appropriate, a survey conducted by Money Management late last year has revealed roughly equal numbers believe the FPA is overreacting.
The proposed changes have also failed to spark action in planning practices, with over half of the respondents indicating they would not change their remuneration or disclosure practices in light of the principles, and 36.7 per cent saying any change would be minimal.
These findings come in spite of efforts by FPA deputy chair Sarah Brennan, amongst others in the FPA’s taskforce on conflicts of interest, to explain to members the expected consequences of the principles’ implementation.
FPA government relations manager John Anning said the taskforce recognised the need for more education on the principles, adding the FPA was “heartened” by the support of 43 per cent of survey respondents.
Anning said the FPA was unconcerned that over 80 per cent of advisers surveyed said they believed the principles would have either no effect, or only slightly improve consumer perceptions of the industry.
One planner commented: “Our clients are not concerned as long as conflicts are disclosed.”
Another said: “Our very happy clients could not give two hoots about the issue.”
Anning said the FPA expected the principles to have a “very significant impact” on “opinion makers” such as consumer representatives, politicians and regulators.
“Statements from these people would lead to greater confidence in the objectivity of the advice people receive from their financial planner,” he said.
AXA Financial Planning adviser Thomas Tang, who responded to the survey, said the fact that the principles prevented biased commissions would also improve public perceptions.
“In time clients will realise that the things we do are not going to be biased to any particular products,” he said
