The financial planning industry is in danger of losing its ‘social license' to operate and needs to look beyond its traditional stakeholders to the interests of consumers, according to Infocus Wealth Management managing director, Rod Bristow.
In a column to be published in an upcoming edition of Money Management, Bristow argues that the financial planning industry is facing a crisis because it has not lived up to the expectations of Government or the public.
"… over the last five years we have been subjected to numerous Inquiries, Parliamentary Joint Committees and other scrutiny, as Government perceives we are not acting in a way that the public (their key constituency) expects," he said. "This is highly problematic and, almost without noticing, as a profession we have become the subject of public derision — despite the undoubted great work we do every day in helping Australians achieve their life goals."
"Every participant in our industry maintains their requisite licensing to operate. It is one of the explicit ‘hygiene factors' without which industry participants simply cannot operate. What we have lost, however, is our implicit license to operate — our ‘social licence'," Bristow said.
He said that in addition to this loss of social license, there were other factors at play not the least the structure of the industry and the dominance of the big banks and AMP.
Bristow has questioned whether the public would have a positive view of the financial planning industry if it were to more actively engage with and draw representation from consumer group, including with respect to defining and implementing minimum industry standards.
"I believe as an industry we need to grasp this nettle, quickly, to minimise the damage from further erosion of public confidence in our industry," he said. "This requires industry leaders to take a broader view of stakeholders."
