Mike Taylor writes that planners and the Government need to reflect upon how they were once again outflanked by the industry funds in the battle for the hearts and minds of the general public.
It happened when the industry superannuation funds launched their “compare the pair” television advertising more than half a decade ago and it happened again with respect to the Government’s proposed changes to Future of Financial Advice (FOFA) – a key financial services public relations battle was lost.
It remains to be seen whether the Minister for Finance, Senator Mathias Cormann, can regain control of the FOFA amendments messaging as a result of his “pause” to the legislative amendment process to allow for further consultation with the stakeholders, but the opponents of change led by Industry Super Australia (ISA) can claim to have won the opening battle.
To be fair to the financial planning industry, it was never the responsibility of the Financial Planning Association (FPA), the Association of Financial Advisers (AFA) or even the Financial Services Council (FSC) to prosecute the arguments in favour of the amendments, but the ISA and its supporters certainly made it their responsibility.
Indeed, it was a measure of just how successful the opponents of the Government’s FOFA change agenda had become when comedians such as Shaun Micallef were satirically referencing the perceived negatives on national television.
It was also a measure of the importance with which the industry funds were viewing opposing the FOFA changes that those attending the Conference of Major Superannuation Funds on the Gold Coast treated Cormann’s announcement of a pause as a significant victory.
The reality for those financial planners supporting the FOFA changes is that the Government clearly underestimated the vigour with which the industry funds would oppose the legislative and regulatory amendments, even though it was being widely discussed that the currently stood-aside Assistant Treasurer, Senator Arthur Sinodinos, had received a warning of what was to come.
Money Management has been told that in one of his earliest ministerial meetings with representatives of the industry funds, Sinodinos was left in no doubt of the level of money and resources which would be thrown at opposing change.
Thus, while the Government was gliding into the Christmas/New Year break, the ISA and others were already developing key messages around the negatives associated with the proposed amendments, particularly with respect to client best interests, consumer protections and the use of commission-based remuneration.
It was not until February and early March that Sinodinos began to counter-punch supported by analyses generated by the FPA, the AFA and FSC.
But arguably the industry funds had already secured the high ground and the daily media was broadly accepting the industry funds’ messages.
This problem was compounded by the fact that the FOFA amendments, upon entering the Parliament, were promptly referred for review by a Parliamentary Committee.
Little wonder, then, that when Sinodinos was stood aside and responsibility for the Financial Services portfolio was handed to Senator Cormann, his first instinct was to activate a “circuit-breaker” in the form of a pause in the legislative process to allow further consultation.
All credit then to groups such as the AFA and FPA which have sought to place at least some of the debate in context, particularly the AFA which last week generated a position outlining the purpose and likely outcome of each of the Government’s proposed legislative amendments.
Cormann has placed no particular timetable on his legislative pause, but it can be expected that he will look to create as much clear air as possible around the Federal Budget at the same time as seeking to regain control of the underlying messages and therefore public perceptions.
But, in the meantime, both he and the financial planning industry are left to reflect upon how quickly and effectively those in the industry super movement once again outflanked them in the battle for the hearts and minds of the general public.
