The state of the industry lies in its own hands
In recent weeks there have been a spate of financial services groups stumbling and falling, and to the casual observer it would appear that the financial planning industry is in serious trouble.
That same cursory glance would also give the impression the industry is full of shonks and people either not licensed to give advice or completely unsuited to do so.
However, those who work closely in and alongside the industry are well aware that this is not the case, and in fact the industry is progressing to the next level of professional development.
But what stops those people and groups who become the failures from shutting up shop in one form and reopening later under a new name, with new stationery and the same old sales pitch?
Aside from slapping them with large fines or even placing them in jail, it is difficult to stop anyone who has broken the industry’s rules from coming back in another guise.
Of course, this does not apply to the spectacular failures who usually end up either being permanently banned or possibly serving time in prison. But for the many smaller players, it is all too easy to slip back into the industry.
As mentioned above, this does not mean the industry is devolving at all — every single occupational field has those individuals who should be working in some other role — but rather that these people and groups are just getting a greater share of the attention. Bad news sells and people like to read it as well.
But is it possible to force the bad elements out of the industry? The recent raft of legislatory changes in the Financial Services Reform Act aims to do so and will have some success, but it cannot effectively oust those with poor ethics or business practices unless they breach specific guidelines.
This task falls to the industry itself. In recent months, in this column and elsewhere, the comment has been made about the continuing drive to professionalism that is occurring within financial planning.
That situation has been lauded but it also faces the challenge of ensuring that as the industry matures into a profession, it weeds out of its own accord those who would seek to keep it held back through practices that were wrong on the day they were first conceived.
Achieving this will be one of the hallmarks of the transition from industry to profession. Failure to do so will bring down the ire of regulators and government who will take their own action to remedy the situation.
AUTHOR
Jason Spits
Recommended for you
Insignia Financial has returned to profit in FY25, after a $185 million loss in the previous year, while its advice division grew their revenue per adviser by 14 per cent.
With licensee switching on the rise, particularly for newer advisers, compliance expert Sean Graham has shared red flags to watch out for when making the jump between AFSLs.
Beyond their investment benefits, over a third of advisers say utilising managed accounts solutions has allowed them to take on more clients, according to Praemium.
Insignia Financial’s wrap platform has appointed Heidi Press, former HUB24 head of product management, to spearhead the design and delivery of the MLC Expand platform.
