In a statement, Mr Townsend said the conversation around financial advisers following the royal commission’s review of the industry (which ran from Monday, 16 April till Friday, 27 April) overlooks a number of important issues.
“Financial planners in this country are copping a kicking that they just don’t deserve. Having watched the royal commission dish it out, and then read the media’s ‘outrage’, I smell a witch hunt and I simply have to point out some things which seem to have been missed in all the ‘courtroom drama’,” he said.
Mr Townsend noted that “there are in the order of 18,000” advisers in Australia, and the number of those who have appeared before the commission is not only “ridiculously small” but that sample is also already skewed.
“They’re the ones the ‘counsel assisting the commission’ have the dirt on,” Mr Townsend explained.
Additionally, the constant changes being made to legislation in the advice space means advisers need to do “much more professional development than your average solicitor” just to keep pace.
“The view that the majority of financial planners are money-hungry spivs is completely wrong. The many that I’ve dealt with have been honest, hard-working professionals who’d do just about anything to ensure their clients are well looked after,” Mr Townsend said.
“That is not to say that the issues raised before the commission are not serious, pervasive, distressing and regrettable. They need to be fixed, but the fix does not have to come by smearing all financial planners with the brush of deceit and dishonesty reserved for the dishonest, self-interested or negligent few.”
Mr Townsend said efforts should be made to better educate the public as to the role and value of financial advice, adding that confusion over the differences between product sellers and true advisers has also “been rampant” among legislators.
Thank you Peter, I appreciate your positive comments. I agree with you wholeheartedly!
Get rid of percentage based advice fees from super
In fact ban fees from super and investments completely and make advice tax deductible
Get rid of the sneaky scammers hiding over the top fees for doing f all
Mr Townsend has a vested interest doesn’t he. I don’t think anyone has ever said that all advisers are “money hungry spivs” but there is a number, not the majority but a noticeable percentage, who do put their priorities above the clients. This bias does not necessarily have to be large, it just needs to exist. And it does.
The industry does not need, certainly not at the moment, someone like a good intentioned Mr Townsend providing an excuse that advisers can cling to and absolve themselves of any responsibility in the RC outcomes. The RC should also be a wake up call to many advisers so that the truly good advisers can grow.
Definitely the institutions, VI and “independent”, must carry the great bulk of responsibility but a lot of what these people have done or not done has many times been influenced / driven by an influential or internal adviser panels. Yes, the institutions haven’t displayed any internal fortitude.
As for educating the public I’m sure, certainly from the many advised clients that I know, the public knows the value of advice. But what they can’t understand is how the fees of advisers are arrived at. A standard percentage on-going applied across all clients in an individual advisers business cannot be justified because no matter how you try to explain it the argument doesn’t stand up. A big step forward would be that % fees are banned. Charge by the hour. Charge by individual service. Only charge by invoice.
None of this is challenging the knowledge or professionalism of GOOD advisers because that is valued. What is being challenged is the factually unsupportable fees and absolute proof of non bias.
Righteous piffle..nothing more..nothing less
P is absolutely correct and you, sir, are a coward hiding behind anonymity.
This “you are using anonymous” comment is soo often used. None of us are really going to know eachother anyway.
Btw you are also a “coward hiding behind anonymity” then.
Some fair comments but advisers need a good kick up the butt for two reasons. First your beloved FPA has shafted you stealth wise over the decades. They have created a compliance monster that have increased your cost so high it is not possible to be compliant and run a business without having to charge through the nose and charge the majority of clients (via the fee for service nonsense) an unfair fee regime they do not warrant being charged. You have stood back and allowed this mafia outfit line their own pockets under the guise of ethics and professionalism and you are STILL supporting them!
Secondly, you have, are and will size up a client the second they walk in with a how much fees can I get this sucker to pay. How can I make them fit my business model. I need X amount a month to cover cost dues to the first point and these clients are my ticket to cover that.
Until you fix the first problem you can’t fix the second.
The future needs to be a streamline easy way to provide advice that doesn’t involve a rip off contract deducting ongoing fees. You all know and have clients that don’t warrant this fee for service BS that is just trumped up hand holding.
Come on, get real, it’s time to change this industry before you destroy it with your nonsense. Start by ridding yourselves of the FPA and AFA’s nonsense. Get hold of your industry and sack these two wharfie thugs.
Steve the only part I agree with is the FPA message. You can’t say you want to be a profession and then turn around and pay membership fees when your fellow members are before a Royal Commission accused of taking bribes (NAB) charging dead people advice fees (CFP) and giving false statements to ASIC and charging ongoing advice fees when there is no adviser (AMP). Planners should get their own house in order…but no they’re happy to be seen by the public as getting payments from product manufacturers. Sad to say but I think planners just don’t seem to really care about the industry they work in given they are so complicit.
Righteous piffle No: 2.
A couple of prickly comments which I see have already hit the mark. Clients are a fair revenue source for services delivered by professional advisers but they are not cash cows from which to milk unfair, unsubstantiated fees by any lazy adviser.
But I agree completely with your comments about fees.
I don’t know if the FPA and AFA are wharfies but they certainly have not done a thing to demonstrate a professional image for the industry. They will obviously run cover for a poor adviser as much as a VI licensee will – far from a good look.
I don’t disagree with your comments at all. I said something similar in another article and got negative likes (sniff). If conflicts were removed and fees paid by invoice for the job done, and we were then treated like professionals….would we still have to prepare 60 page SOAs and full fact finds to do a simple super contribution strategy? That’s the unanswered question. Provide the advice only, get paid – job done. If client doesn’t or can’t implement it, that’s their problem. NEXT please. Imagine how many more people we could provide advice to and not get bogged down with compliance and admin stuff-ups. We would all sleep a lot better at night knowing we’ve been paid for the job done and don’t have to worry about the next audit, FDS, Opt-ins, massive SOAs, fighting over fees, turning fees on and off, commission claw-backs, being flogged by FOS over market losses. Strip the industry bare – if it survives that means there is a viable market for it. Set your client free and if they come back for a review you must be doing something right. At the moment the advice industry is propped up by ongoing review fees, grandfathered trails. Did I mention Client Value Propositions? That’s so 2010s…
[u]Thank you[/u] Peter. It has been frustrating, but not surprising, that the media (and politicians) don’t appear to be making any distinction at all between product sellers and true advisers. As a result, ‘hard working professionals’ will, yet again, be left to pick up the pieces.
Thankyou!
If I knew nothing about financial planning prior to the Royal Commission then the impression that I would have is that our industry is corrupt with no-one receiving good service or advice.
As a small business practitioner, I let all my clients that they are my business and having them with me over a long period of time is more valuable to me than short term profits.
The media (and it seems all Politicians) do not understand the compliance and complexity of providing advice to people. It is difficult, time consuming and expensive.
The industry has changed and will continue to evolve. I am not sure where things will end up. We will certainly see experienced planners leave, the demise of the risk insurance adviser and the massive jump in advice fees in the future.
Our industry needs leadership and someone that stands up for all the good people that exist within our industry. Our job is more than “selling”… it is relationships and a profession that can help people at the time of their most need.
We need to ensure that this can be explained to people and we need to CALL OUT when mistruths are said (particularly from Politicians who have a political agenda). I just hope we have the leadership to stand up so that our industry can shine.
Well said! I would love to start posting all my client letters of appreciation to combat this negativity in our industry!
hear hear – the problem lies with ASIC failure to act in many matters – it would be great if IFA chased up ASIC’s action on the Advisers mentioned at the RC – Henderson , Bird and others
The RC had a list of cherry picked problems – for which it could inspire an all too willing media – note the Fairfax side of the press is heavily linked to the ISN world – curious that not one case of malfeasance was found within the ISN world yet we all know that is a nice little hotbed of sad stories and actions in breach of the Corps Act. a bit of a case that its more that what is not said or discussed in this instance. You cannot defend the actions of those so publicly pilloried – for mine (having watched and listened to a large part of the coverage) it wasn’t an investigation – it was a expose on known cases and issues – with one exception – Henderson – It remains to be seen if our law makers respond or see that we already have the regulation in place to catch these issues. – We live in interesting times – and our erstwhile institutions – the banks have been exposed.
Well said, but planners need to get off their butts and look within and start taking accountability for their own actions.
We can never be a profession when some so called professional associations like the FPA have members such as Commonwealth Financial Planning and AMP. To be a member of these associations and say nothing to the FPA is just being complicit with what’s happening at the RC. A simple email to the FPA calling for the end of the professional partner program, the segregation of member fees and the same process that applies to individual members as to licensees is all it will take. Either write to the FPA or just resign. To do nothing is wrong and sends a message that the behavior we’ve seen by Senior ranks of these firms is acceptable.
Thank you for that. I was asked the other day what I did and for the first time in my 15 years in the profession, I said I worked in finance because I was embarrassed to say a financial planner after the fall out from the RC
🙁
Broken record time Mr Townsend – the root of the problem has not been addressed in court or anywhere. The management at various levels that covered up and / or promoted sly conduct. When the RC addresses that one big issue the industry can move on.
hmm a fair, reasonable and just opinion with views reflecting reality…that will never make the mainstream press!
Excellent writing, Peter. At last someone with a bit of courage and knowledge and perspective.
Yep, and thanks.
The Royal Commission has raised issues that many of us have known about for years, and that need to be fixed. But the whole profession is not to blame and should not wear the shame.
Melinda. I do not think that any reasonable person is blaming the whole of the financial planning industry. The conduct that is being actually referred to in the RC represents (hopefully) a minority of the 20,000+ planners. However, when the RC finds that there have been around 200,000+ instances where Australians have been charged fees for service that have not been delivered, based on objective evidence – i.e. where information in the clients’ FDSs as to services actually provided do not reconcile with the evidence of servicing and annual reviews contained in the client files – then there is an enormous systemic problem that Peter’s article cannot “sweep-away” with a suggestion that the problem is being blown out of proportion. At this level, it probably represents the largest and most wide spread fraud in Australian commercial history.
If financial planners want to be taken seriously and as a profession going forward they will need to regain the market’s trust. I feel that the FPA’s apparent “games” related to the Henderson matter do nothing that would cause Australians to be confident in financial planning as a profession.
The ‘fees-for-no-service’ issue has absolutely been blown out of proportion mate. Most of the issues exposed by ASIC are pre-FOFA and were a result of over-zealous managers mandating service agreements that were out of line with mainstream practice and over the top in terms of what clients expect. The advisers weren’t on board and they didn’t have the resources to meet the promises. Despite this, most clients have been very happy with the services they received (yes even at CBA and AMP), as evidenced by the extremely high levels of client satisfaction (when compared to other professions). But that’s the past. ASIC themselves have said they expect things to be a lot better in the post-FOFA environment. The issues identified in the RC are important and they will act as examples for any advice businesses who were flirting on the edges or crossing the line in certain areas.
But don’t kid yourself mate. EVERY profession has problems. Engineering – illegal flammable cladding covering thousands of buildings; Doctors – the ABC has quoted evidence suggesting 18,000 die each year due to medical errors; Pharmacists – shamelessly flog conflicted brands; Accountants – deeply entrenched unlicensed advice, kickbacks and conflicted SMSF services, with little avenue to remediation when things go wrong; Lawyers – prey on investors in failed investment schemes, with little hope of remediation, then negotiate settlements which see them pocket enormous fees with investors far worse than they were in the first place.
Yep, unfortunately the conduct is definitely here. Unless we put up a stand and call out those doing the wrong thing, we will all be tarred with the same brush. Pretty sick of it to be honest but when you report something to ASIC nothing gets done anyways…