As 2018 draws to an end and as public perceptions of financial planners remain in the doldrums on the back of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry it is to be hoped that this represents a watershed year for the industry.
I use the term “watershed” in the context of 2018 representing a turning point for financial planning wherein it can finally leave behind the succession of changes which evolved out of the global financial crisis (GFC) and were driven by factors such as the collapse of Storm Financial, the illegalities of Trio Astarra and the vertically-integrated mis-steps of the major banks.
While the Royal Commission has succeeded in delivering up a succession of sensational and negative headlines about the financial services industry, with the exception of some of the revelations around AMP Limited and direct insurance, it has really done little more than rake over the coals to re-ignite matters which were already known and very often already being dealt with.
Worth noting, as the industry awaits the tabling of Commissioner Kenneth Hayne’s final report in February is the reality that the Royal Commission has been perceived as letting some sectors off lightly when compared to others, notwithstanding the written evidence concerning major industry fund Cbus and the activities of over-arching industry funds body, Industry Funds Services.
But looking back at who was named and who was not named during the Royal Commission will not serve the best interests of the financial planning industry. Rather, it must now look to the future and the reality that a large proportion of planners will be heading for the exit over the next two years as a result of the new Financial Adviser Standards and Ethics (FASEA) regime.
While the final shape of the FASEA regime has, at the time of writing, yet to be announced, those planners who choose to leave will be those who cannot or do not believe they can meet the degree minimum academic requirements and those who are, in any case, in the twilight of their financial planning careers.
Will the exit of these planners result in an erosion of experience and capability? Yes. Is their loss going to be insurmountable? Perhaps only in the short term.
It is in these circumstances that those voices in the financial planning community who continue to rail against the changes being wrought by the FASEA regime and against the changes likely to result from the Royal Commission need to look forward, rather than back. They need to accept that history, consumer sentiment and political reality are all stacked heavily against a return to the old ways.
At this juncture, at the close of 2018, the only reason financial planners should be looking back is to see how far they’ve actually come.
This represents the last print edition of Money Management for 2018. On behalf of the entire team I would like to wish all our readers a safe and Merry Christmas and a prosperous 2019.