If the centrepiece for change in the financial services industry in 2006 was the Federal Budget, then the chief executive of the Investment and Financial ServicesAssociation (IFSA), Richard Gilbert, is well satisfied.
Looking back over the events of 2006, Gilbert believes that notwithstanding some adverse publicity there is plenty to be pleased about, and that the changes superannuation contained in the Federal Budget, particularly the taxation changes, are a testimony to the hard work put in by IFSA and a number of other key financial services organisations, including the Association of SuperannuationFunds of Australia (ASFA).
“At the end of the day, the IFSA and ASFA alliance on superannuation tax reform was successful,” he said.
“Never before have we had a Budget which has been so sympathetic to the building of superannuation balances.”
Gilbert acknowledged that the Government’s decision to cut the level of tax on superannuation exits rather than entry may have taken some in the industry by surprise, but believed it reflected a desire by the Treasurer, Peter Costello, “to do it my way”.
“What is crucial, however, is that if the industry had not mounted its campaign and made its position clear then we would not have received this Budget outcome,” he said.
While the financial services industry has taken its share of flack throughout 2006, Gilbert takes considerable comfort from the fact that the recently-released results of the IFSA Investor Sentiment survey, which reveal that, notwithstanding adverse publicity, consumer confidence in the industry remains high.
Gilbert reflected upon what he told the Financial Planning Association’s national conference in Melbourne in late November that — according to the Investor Sentiment Survey — 94 per cent of those currently seeing a financial planner are satisfied with their experience.
He said the research also showed that four out of five people felt better off as a result of using a financial planner, and that having a planner helped them to feel better prepared for retirement, giving them greater confidence that they were going to reach their financial goal and have better control of their finances.
“That represents a key outcome and shows that the industry is delivering better on the consumer front across a range of measures,” Gilbert said.
Looking at value of advice, Gilbert said the survey had confirmed that consumers could see the value of advice.
“Clearly, the debate in the media about the value of advice is not the debate that is being had in the lounge room,” he said.
Gilbert said that while the Westpoint collapse had certainly served to hurt the industry and create some negative perceptions, it was clear from consumer reactions that Westpoint was not regarded as broadly indicative of the state of the industry.
As well, Gilbert believes the debate around conflict of interest has largely been a manifestation of industry discussion rather than controversy in the broader community.
“The media coverage of these issues has been disappointing and there is a danger that industry issues like these can spill into the consumer environment,” he said.
Looking over the horizon, Gilbert believes that as the major political parties move towards the next federal election there is scope for further change, particularly with respect to superannuation.
He said that with the Budget in surplus, superannuation remained an attractive avenue via which governments could deliver benefits without having an undue inflationary impact.
Discussing the underlying regulatory environment confronting the financial services industry, Gilbert said he was heartened by recent indications from the Australian Labor Party that it would not be moving to radically alter the Financial Services Reform Act or seek to impose particular policies with respect to adviser remuneration.
— Mike Taylor
