THE RECENT departure of Greg Perry from Colonial highlights the critical role of key people in an organisation. Perry has stated many times in the past that he is ably supported by experienced and qualified staff, but he still has a presence and market persona, which also bears some weight.
The same idea applies in a financial planning practice. Given this and the great lengths large industry groups have gone to engineer their respective upcoming transitions, how much more should this be occurring in the practices of financial planners?
The Australian Securities and Investments Commission (ASIC) expects that the transition to the new regime under the Financial Services Reform Act (FSRA) will shake out some of the industry who will choose to retire rather than attempt to gain an Australian Financial Services Licence.
This raises a number of issues. A key issue is that these planners cannot or are not able to pass their business on to partners or colleagues because they have not set up the facility to do so. It also means they have held on to the idea of the key person for far too long.
In recent weeks, this column has mentioned the need for greater professionalism through planner education, disclosure, clarity in advice and simplicity for clients seeking a professional adviser.
A planner may have all these but if they have not put in place appropriate structures to deal with themselves opting out of their business, the planner has still performed a disservice to their clients.
This has been done by them not providing their clients with all the information they need to make the best decisions about their future, bearing in mind many clients see the ongoing provision of advice from the same source as part of their own greater financial picture.
It would also seem an illogical business step. Few planners would tell clients to provide for the future and then fail to heed their own advice.
The good news is that the industry has seen this coming for some time, as it has watched the first batch of planners from the early days of the industry move towards retirement, and the FSRA has also been heralded for more than two years.
Let’s hope that the new regime does not shake out the acquired experience and knowledge of the past two decades before it’s time because those who hold it have been foolish enough not to take their own advice.
