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A financial planner from a boutique firm has raised concerns that while a consultative approach by the Government is good “in theory”, the process risks being dominated by larger institutions, at a cost to the views of smaller participants.
Paul Gerrard, the managing director boutique planning firm APT Strategy, also argued that influence exerted by large financial services institutions may have played a part in the current regulatory environment, which is now being questioned by some quarters.
Gerrard made the comments in his submission to the parliamentary joint committee inquiry into financial products and services.
Among a raft of recommendations and suggestions regarding the state of the industry, Gerrard questioned whether consultative processes such as the current inquiry actually “lead to good outcomes for consumers”.
Gerrard said while “in theory consultation is good”, he believes the process is skewed to the big end of town.
“Perhaps this imbalance in communication power has contributed to the existing regulatory environment being the way it is,” Gerrard said.
Gerrard argued that large entities could afford to employ staff skilled in public relations, communications, and lobbying. By contrast, Gerrard said, small entities such as individual financial advisers, small licensees and consumers are “poorly resourced and preparing a submission can be a huge drain on their resources”.
“A basic problem with such consultative processes is that large entities have greater resources and more dollars at stake than small entities,” Gerrard said.
“This gives them the ability and incentive to allocate far greater resources to preparing submissions than small entities.”
Submissions from smaller players are also likely to be “less polished and less convincingly argued than submissions prepared by institutions”.
The net effect of this is that the voices of smaller participants in the financial services industry may be drowned out by larger players.
Gerrard was also concerned that large entities, which “appear to enjoy closer ongoing communication with regulators”, may have an advantage in understanding how best to present their arguments.
He believes the “imbalance of communication power” applies not only to this inquiry, but also in others arenas, including the media.
Gerrard is a former director of the Financial Planning Association and a member of the executive committee of the Boutique Financial Planning Principals Group.
