Still cutting his teeth in the financial planning profession, Danial White hasn’t been around long enough to bear witness to any dodgy soft dollar deals or conflicts of interest. But he is on guard.
“Personally, I think soft dollar or commissions or anything that can’t be readily disclosed to the client is not good for the industry. It decreases client confidence in the advice they’re being given.”
Thanks to disclosure requirements brought on by the new Financial Services Reform (FSR) regime, the 28-year-old paraplanner from Brisbane doesn’t think there will be much scope for soft dollar type remuneration to prevail — except in one circumstance.
“The only exception would be where financial product providers, say your fund managers, can provide education and research to increase the adviser’s understanding of the products which are being promoted.
“I think that’s the only legitimate form, because there is interaction between the adviser and the initial product providers.”
With two degrees and a diploma under his belt and one in progress, White is well educated and well travelled.
After completing a bachelor of commerce in parallel with a bachelor of arts in 1998, he went and did the backpacking trek around Europe.
On returning to Australia, he moved from Brisbane to spend four years sweating it out on Sydney’s trading room floors for a host of fund managers and completed a graduate diploma in applied finance and investment at the Securities Institute of Australia (SIA).
Towards the end of last year, White decided that he wanted to return to Brisbane and become a financial planner.
“I still had an interest in finance but wanted to move away from what was a very quantitative environment to get a role with more client focus.”
Now enrolled in a diploma of financial planning at the SIA, White has spent the last six months working as a paraplanner for accountancy-based financial services firm William Buck.
Despite his extensive experience working with investment markets, he doesn’t see himself focusing purely on investment management when he becomes a financial planner.
“I think it will be important to have a solid understanding of superannuation, personal risk insurance and estate planning, so the way I see myself going would be more for a broad-based approach to service the client.”
Like many of his peers, White thinks the FSRA has been a positive for both planners and their clients.
“The Australian Consumers’ Association’s Quality of Advice report probably tarnished the public’s perception of financial planners. However, FSRA has helped build confidence in people to come back to the profession again.”
But White feels that financial planning still has some way to go before it can be held in the same esteem as the accountancy profession.
Although he feels the Financial Planning Association is doing a good job promoting financial planning standards and lobbying government, he can identify areas for improvement.
“I think probably the only area where they could improve their role is promoting the CFP designation amongst the public, perhaps a little along the lines of the marketing campaigns used by the accountancy bodies,” he says.
“I just think that it’s a good opportunity now, during a period of transition, to really promote that qualification.”
Next year, White intends to begin study for his CFP.
“If it’s promoted correctly, the CFP will be very valuable to have both from a marketing perspective but also from a development perspective as well.”
White also thinks that a move towards fee for service-based remuneration is needed to help repair the industry’s damaged reputation.
“I guess the commission-based remuneration has historically been one where it’s been taking an upfront commission, so the focus has been on doing the deal, closing the transaction and earning the income. But I don’t think that model will have a wide base of support going forward,” he says.
“I think the movement to the fee-for-service style arrangement, whether the fee be purely on a level of service arrangement with the client or a per hour service rate, or a percentage of funds under administration, I think that’s probably a more viable business model to work with going forward. That’s where I see myself at least trying to operate within the industry.”
