While 2015 threw up its share of challenges for financial planners and the broader financial planning industry, it also confirmed that planners could speak with one voice when it mattered, Mike Taylor writes.
As this is the last print edition of Money Management for 2015, it is worth reflecting upon the fortunes of the financial planning industry this year — the positives and the negatives — and the fact that the industry has once again been required to make difficult concessions in the face of political/regulatory agendas.
Arguably the most contentious issue to confront the financial planning industry in 2015 was the fall-out from the Trowbridge Report into life/risk remuneration which ultimately evolved into the so-called Life Insurance Framework — the final details of which were made clear by the Assistant Treasurer, Kelly O’Dwyer, in the first week of November.
One of the little discussed elements of the Trowbridge and LIF process is the degree to which it impacted the Association of Financial Advisers (AFA). As the dust settles from the exercise, it is clear that the AFA’s support for the Trowbridge process was not to the liking of some of its members. That dislike then translated into some choosing to leave the organisation.
It seems a number of those who left the AFA chose to join the Association of Independently Owned Financial Professionals (AIOFP) which, while not party to the Trowbridge and LIF processes, was vocally critical of its outcome.
On the face of it, the initial LIF outcome suggested a significant victory for the Financial Services Council and some of the insurers, largely at the expense of risk advisers. Indeed, at the time when the first LIF outcome was announced by the then Assistant Treasurer, Josh Frydenberg, Money Management reflected that it was going to be a tough “sell” for the AFA and particularly its chief executive, Brad Fox. We suggested that where the Trowbridge and LIF processes had been concerned, the AFA had found itself in a situation where it was “damned if it did, and damned if it didn’t”.
That is why the early November changes to the LIF announced by Assistant Treasurer, Kelly O’Dwyer, were so much to be welcomed, particularly the winding back of the claw-back arrangements to two years and the undertaking to develop appropriate lapse reporting data.
It goes without saying that there will remain many risk advisers who remain unhappy about the winding back of upfront commissions to 80 per cent premiums from July next year, and then 70 per cent a year later, and 60 per cent from July 2018, but in many respects it is a better outcome than that proposed by Financial System Inquiry (FSI) and advocated by some industry funds spokesmen.
Worth noting in the wash up from the Trowbridge/LIF process is that while some groups remained highly critical of the outcome, it served to unite the AFA and the Financial Planning Association (FPA) in a common purpose and it is arguable that the outcome announced by O’Dwyer in November reflected that unity of purpose.
Thus, as 2015 draws to a close, the financial planning industry has confirmed it is capable of speaking with one voice on the big issues.
On behalf of the entire team at Money Management, we wish our readers a safe and merry Christmas and a prosperous New Year. Our first print edition of 2016 will appear on February 17.
