Once upon a time, in a galaxy far, far away, there existed a financial world in which there were "agents" and "brokers".
Agents represented institutions, and brokers represented clients.
Both provided good advice to their respective clients - even though from time to time some Jedi adviser would turn to the dark side.
Clients understood that their adviser was either biased towards the company they represented or worked from a range of options across the open market.
Institutions liked this, as it "tied up" their marketing forces, and kept dollars circulating in huge, profitable black holes.
Clients began flocking to brokers, who led a rebellion against the Institutions. The tactical response of the Institutions was to build a series of Battle Stars to protect their outer frontiers from attack. Eventually, these frontier outposts led to discussions between agents, who convinced their institutions to open their borders just a little, and share some of their booty. Agents could now offer more than one institution's wares, and they prospered, along with their institution.
The war melted into a frontier skirmish, with both sides confused and dazed as to where the borders were to be drawn.
There is an awful lot of angst in today's border skirmishes. They are really just demarkation disputes. The legislative system does little to deal with today's technology, and advisers are almost as confused as clients.
History has a great deal to teach us.
The Royal Commission absolutely failed to address the primary issue underlying financial services in Australia today - and that is BIAS. There's no real problem to bias, so long as it is obvious. The retention of vertical integration allowed, and even condoned the underlying problems as being "ok", simply because the big institutions have enough money to pay for their indescretions. Eventually. So we retain a system that benefits some and penalises others, simply because of which battle insignia they wear.
The provision of financial advice is a complex issue. More subtlety and finesse would be a good response, rather than these sector-smashing wars of attrition.
Industry super funds have done a fantastic job for the average member. They have reduced costs across the board, albeit by nowhere near as much as they should have been able to achieve had they stuck to their core principles. They deserve a say in any SUPERANNUATION discussion.
But they do not represent financial services generally. That is a much wider field. And in that field, discussion should embrace a wider set of market players, and consider more than just one business model.
That is the discussion Australia needs ot have. There is more to financial services than just superannuation. The super dollars have become so big, and created so many big vested interests that super funds and their army of administrators/managers are being given a bigger seat at the financial services table than they deserve.
That is the discussion that Australia needs to have. Super is just a tax regiime. It's bigger than all the others but financial planning is about more than super. More people need to remember that when discussing money and ideas for rules and legislation.
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