Why planners are in it for the long haul

Given a decade of generally bad publicity for the financial planning sector, it is a wonder that planner numbers have not seriously declined. 

It is hard to imagine an industry or profession receiving more bad publicity over the past eight years than has financial planning. Arguably, the media scrutiny directed at Commonwealth Financial Planning served to intensify that negativity over the past eight months. 

But, despite all of this, Money Management’s 2014 Top 100 dealer groups data has revealed an industry within which planner numbers have remained remarkably static over the past two years. Few planners appear to have exited the industry and those who have appear to have been replaced by new entrants. 

What is clear, though, is that notwithstanding the general assessment that a strong need exists for good financial advice, planner numbers are not growing and there is evidence to suggest that the number of planners working in the sector is unlikely to exceed much more than the 17,370 recorded in 2010 for at least the next half-decade. 

There are a number of reasons for this, not least the manner in which bank-driven vertical integration has changed the texture of financial planning. However the greater impediment to growth in planner numbers has undoubtedly been a combination on the evolution of the Future of Financial Advice changes and the generally negative publicity which has attended the industry for well over a decade. 

A combination of the product failures which occurred from about 2002 onwards combined with the commercial and political aspirations of the industry funds movement have served to ensure that financial planning has suffered severe reputational damage. 

There is no walking away from the fact that years after the failures occurred, collapses such as Westpoint, Timbercorp, Storm Financial and Trio/Astarra are still weighing heavily on public perceptions of planners and the sector generally. Further, there is no walking away from the fact that some planners allowed themselves to become entangled in some of these events. That said, accountants were undoubtedly the most culpable where agricultural managed investment schemes were concerned. 

The negative publicity which flowed from such collapses was unavoidable, but the impact was made more acute by the relentless campaigning of the industry funds via their “compare the pair” television advertising and their establishment of a well-resourced lobbying arm in the form of the Industry Super Network which is now Industry Super Australia. 

It may seem ironic, then, that for a period of about two years some of the most significant increases in planner numbers occurred within the planning businesses of the industry funds themselves, including Industry Funds Financial Planning. 

With consolidation still occurring within the financial planning industry as witnessed by last week’s announcement about Australian Unity’s bid for Premium Wealth Management, a number of factors need to change before planner numbers seem likely to rise. Among those factors are making the provision of financial advice more broadly tax deductible and a prolonged period of no negative publicity.