A little earlier this month, the chief investment officer of Select Asset Management, Dominic McCormick, had the temerity to write a column critical of the processes and reporting which had led to IOOF becoming the subject of headlines over whistle-blower allegations.
McCormick actually used a contribution published by the Portfolio Construction Forum to voice his concerns about the way in which IOOF had been treated by some elements of the media and was rewarded just a few days later, finding himself referenced with a frown by members of the Senate Economics Committee.
What McCormick had sought to do in his column was put the events which had given rise to the IOOF headlines into context — stating: “… to me, this increasingly looks like a witch-hunt sparked by a bitter ex-employee(s) (the “whistle-blower”) with curious access to confidential internal IOOF company documents, combined with the chase for a story by over-eager journalists who most likely don’t fully understand those documents”.
McCormick acknowledged in his column that he had, in fact, worked with one of the IOOF executives at the centre of the allegations.
It should probably have surprised no one in the financial planning community that at the same time as reporting the Senate Committee’s interrogation of IOOF boss, Chris Kelaher, a significant media player, the ABC, made reference to financial planning and the need for a Royal Commission into the financial planning industry.
The problem, of course, is that notwithstanding the serious nature of the allegations raised with respect to IOOF they have, as yet, no direct link to that company’s extensive financial planning business. Rather, they have everything to do with the company’s research division and the manner in which it has been run.
Little more than a week after the Senate Economics Committee had finished its interrogation of Kelaher, one of the journalists who had first reported the whistle-blower allegations against IOOF sought to raise investor losses at the hands of failed agricultural managed investment outfit, Timbercorp, in the context of a “financial planner” who had been described under Parliamentary privilege by Labor Senator, Sam Dastyari, as a “crook, a criminal and a fraudster”.
The problem with the “financial planner” descriptor is that the person referenced by Dastyari is in fact an accountant and the well understood history of the Timbercorp fiasco points to the fact that, notwithstanding the involvement of some financial planners, it was very much an accountants’ play predicated upon delivering tax deductions to interested clients.
The bottom line, however, is that while there was no reason to link the IOOF problems to financial planning, such a link was made and while it is common knowledge that Timbercorp was largely a tax-related accountant play, references are now being made to financial planning. Little wonder, then, that the financial planning industry finds it almost impossible to repair its badly tarnished reputation.
The reality, of course, is that a coalition of interests is working assiduously at ensuring the financial planning industry is subject to a Royal Commission and that members of the Senate Economics Committee such as Dastyari and the National Party’s John “Wacka’ Williams are heavily committed to that outcome.
However if the proponents of a Royal Commission are to have any genuine credibility, they need to stop seeking to spin every negative event in the financial services industry into a problem involving financial planners. They are doing a serious disservice to an increasingly professional financial planning industry and to their own credibility.
