Recognising the value of financial advice
Financial planners may be upset with Club Plus' Paul Cahill for some of his recent comments, but they should embrace his acknowledgement of the value of advice, Mike Taylor writes.
The chief executive of industry fund Club Plus, Paul Cahill, caused a good deal of chatter among financial planners last week when he was reported in Money Management as acknowledging that after 20 years of having been a critic, he had now recognised the benefits of financial planning.
The chatter among financial planners was generated not so much by Cahill’s embrace of the value of advice but by the manner in which he said it had served to benefit Club Plus through super account consolidation and other factors.
The instinctive reaction of many of Money Management’s financial planner readers was that the advice provided to people using the Club Plus financial planning service might not have served the best interests of clients because it might not have canvassed products other than those offered by the superannuation fund.
Only the clients and their planners can ultimately know what was discussed and the type of Statement of Advice that was provided, but what is clear from Cahill’s words is that the advisers ticked at least one box by recommending superannuation account consolidation.
Was Club Plus the best place for those clients to consolidate their super? Well, given that Club Plus draws its members from the highly mobile catchment which is the hospitality industry and that the fund returned 9.8 per cent from its balanced option in calendar year 2010, perhaps it was.
What also needs to be recognised about Club Plus Financial Planning is that it operates under the auspices of Mercer Investment Nominees and that the planners representing the fund are actually authorised representatives of Mercer.
So the question then really becomes whether planners who are authorised representatives of Mercer would be conscious of their obligation to make clients fully aware of their options extending beyond the product set offered by Club Plus.
In other words, Club Plus may be an industry fund but it has chosen not to utilise the services of Industry Funds Financial Planning but, rather, it is operating in the context of an Australian Financial Services Licensee that has links to both the Financial Services Council and the Financial Planning Association.
Indeed, the former chief executive of the FPA, Jo-Anne Bloch, now works within the planning arm of Mercer.
It should also be noted that a number of financial planning dealer groups have similar arrangements with superannuation funds with respect to the provision of financial advice.
Planner angst at the nature of Cahill’s words is understandable but it would be wrong to condemn him for his conversion to the value of advice.
AUTHOR
Mike Taylor
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