An important statistical snippet came to light during the hearings into legally enshrining the terms ‘financial planner/adviser’ – nearly 50 per cent of planners/advisers choose not to be members of either the Financial Planning Association or the Association of Financial Advisers.
When a Parliamentary Joint Committee last week held hearings in Sydney dealing with the Government’s legislation to legally enshrine the terms ‘financial planner/adviser’, an important statistical snippet came to light – that nearly 50 per cent of planners/advisers choose not to be members of either the Financial Planning Association (FPA) or the Association of Financial Advisers (AFA).
If accurate, this is an important statistic because it speaks to precisely how representative the two largest planning organisations actually are of the total industry, and therefore just how much elements of the Government’s Future of Financial Advice (FOFA) changes might have served the interests of those organisations.
Written and interpreted in a particular way, the codes of conduct elements of the FOFA legislation and the enshrinement legislation might have served to compel financial planners to become members of one or both of the FPA or the AFA.
While it remains to be seen whether the enshrinement legislation will actually make it through the Parliament before the Federal election, it is already clear that while signing up to an approved code of conduct will obviate the need to comply with opt-in, this, of itself, will not compel planners to join either the FPA or the AFA.
Indeed, there are many planners who remain totally unmoved by the whole question of opt-in and codes of conduct, knowing that the Federal Opposition has committed to repealing that element of FOFA if it gains Government at the next Federal election.
What is also already clear is that if the enshrinement legislation fails to make it through the Parliament during the busy Budget sitting weeks and before the Federal election, then it will probably never see the light of day.
While the Coalition is unlikely to move to repeal the legislation once it is enacted, the Opposition spokesman on Financial Services, Senator Mathias Cormann, has made it clear that he does not believe enshrinement is warranted.
The bottom line, then – for both the FPA and the AFA – is that the political calendar is moving at such a pace that they will not be reaping a membership/revenue dividend from the legislative and regulatory framework generated by the Government over the past three years.
This should not be regarded as a negative outcome for the financial planning industry.
Rather, planners should accept the positive elements of the FOFA changes, and in the event that the enshrinement legislation is passed, the manner in which this will help lift public perceptions of their calling.
Organisations which seek to represent the interests of industries or professions should not need to resort to legislative or regulatory compulsion.
