Sound and fury signifying nothing

The Financial Planning Association (FPA) has not made a good start to 2009.

The fallout from the Storm Financial collapse has carried with it criticism of the organisation’s general attitude to leverage while a stoush, essentially between a non-member company and a Sydney FPA chapter official, has acted as a somewhat prurient distraction.

But far more important in the broader scheme of things is the fact that the terms of reference for a Parliamentary inquiry will traverse the entire issue of planner remuneration, reopening one of the longest-running and most contentious debates to have ever occurred in the industry.

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However, those who see the inquiry as something of a witch-hunt of financial planners might reflect upon a similar exercise, held during the final term of the Howard Government, which was viewed as similarly pursuing industry funds. The political tide ebbs and flows.

While there is little doubt that the industry funds will not wish to miss an opportunity to bang their drum on the question of fees versus commissions, it ought be remembered that Parliamentary committees are made up of Members and Senators from both sides of the house and that the industry funds will be equally exposed to questioning.

Perhaps, for instance, a member of the Opposition might choose to pursue the issue of which industry funds are highly exposed to illiquid assets such as direct property.

Then, too, it is always possible for those members of the Opposition participating in the inquiry to publish a dissenting report.

It should be obvious to all that no one’s interests will be served if the inquiry fails to objectively pursue all the relevant issues and if Parliamentarians fail to put their allegiances and political debts to one side.

Which brings us back to the question of litigation and prurient distractions. Membership of the FPA is entirely voluntary. Companies that do not like the way an organisation is run can choose not to join. It would therefore be very odd if those who choose not to join were seen to be in praise.

All the rest is simply noise — and marketing.

— Mike Taylor

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