Last year was a watershed year for the financial planning sector, writes Richard Klipin. He explains why 2010 promises to be a year of opportunity.
If 2009 was a watershed year for our profession and our sector, 2010 promises to be a year of opportunity, action and engagement with the future.
It will be those who have the courage of their convictions who will gain the most from the seismic shifts we saw throughout last year.
As Bobby Kennedy said: "The future will be shaped in the arena of human activity, by those willing to commit… The future does not belong to those who are content with today."
In some ways 2009 was like a perfect storm that brewed for more than a decade. When it struck, it struck with a vengeance, sweeping out poor business models, overleveraged businesses, optimistic consumers and leaving in its wake a wiser — albeit injured — community.
But as the year drew to a close, we in Australia knew we truly lived in the lucky country. The Government stimulus, $1.3 trillion in super assets and solid balance sheets cushioned us from the worst excesses of the GFC, which are still to be dealt with in most of Europe and the US. So now we can confidently move on to 2010.
Government and policy initiatives
2010 will bring to a conclusion recommendations from:
- the Ripoll Inquiry;
- the Cooper Review; and
- the Henry Review.
These initiatives present the Federal Government with the opportunity to position
Australia as a key player within the global financial services sector. But while sector enhancements are necessary, so too is good detailed research about the effects these initiatives will have across the sector. The overarching drivers must be good consumer outcomes and a strong competitive sector.
Australia has operated a well-run and well-managed financial services sector that has thrived over the past 25 years.
We have the knowledge, skills and experience — in both good times and bad — to export and further develop this sector. It has the potential to become the engine room of our economy, much like the mining sector.
The Minister for Financial Services, Superannuation and Corporate Law Chris Bowen now has the difficult task of balancing recommendations from the Ripoll Inquiry, the Cooper Review and the Henry Review and turning them into productive policy. This may happen before the Federal election, but we will need to wait and see.
Continued merger and acquisition activity
Key players in the financial services sector flexed their muscles in a major way in the second half of 2009. Australia’s big banks were the net beneficiaries of the GFC, thanks in part to the deposit guarantee but also due to robust balance sheets, well-run businesses and the lessons they learned from the recession of the late 1980s.
This muscle has seen the Australian financial services landscape change irrevocably, and 2010 promises continued M&A activity as the major players position themselves for the next 20 years.
Along with shareholder value, the key issues to address are consumer value, consumer choice and competition. In the supermarket world three players dominate: Coles, Woolworths and IGA. Is this the direction financial services is headed in?
Major issues for 2010
- Rebuilding trust: The keys to rebuilding trust are having the right market settings and the right policy settings. It’s about living and breathing transparency and sensible, workable disclosure.
- Adviser education: Ensuring that advisers have a thorough, rigorous education — the right programs, the right courses and the right balance between theory, practice and knowledge. 2010 is the year of committing to education. Advisers need to invest in their own education, go back to school and challenge themselves, their practices and their thinking.
- The role of the adviser: Now more than ever, the role of the adviser is key to building, managing and protecting the wealth of consumers. Good advisers become partners in their clients’ lives; advising, planning, coaching and mentoring them. We need to get the heart of this message out to the community to ensure that more than the current 30 per cent of all Australians receive advice.
As Lao Tse said, "A journey of a thousand miles begins with a single step."
Richard Klipin is chief executive of the Association of Financial Advisers.
