Dear ifa, the Year 2010 called, and they’d like their worldview back.
Your latest editorial reports FPA-member driven changes as some sort of ‘shock horror’ scandal. All the FPA is guilty of is methodologically and competently executing a strategy that over 90 per cent of their members approved nearly six years ago.
‘Hunter becomes the Hunted’ is a wonderful polemic if your aim is to increase website clicks and tilt at windmills. But, as a considered critique of an organisation that is unashamedly dedicated to advancing professionalism in financial advice, it is less accurate than a Trump Inauguration headcount.
Nearly six years ago, FPA members voted for a radical change. Dealer groups actually voted themselves out, and in the highest turnout in the organisation’s history, 94 per cent of members chose to put the public interest ahead of their own. They willingly chose to fund an organisation that, if push came to shove, would look after the punters ahead of the planners.
This was a critical first step to filling the ‘ethical gap’ of peer accountability that was needed if financial planning was ever to achieve professional status. I might live a closeted existence, but I’ve yet to meet an adviser that thinks that increased professionalism is a bad thing.
Right now, financial planners are indeed struggling under the weight of increased and demanding red tape. Why? Because regulation is the only medium our lawmakers and regulators have as a proxy for quality. Meet the form of good advice and, hopefully, you will meet the essence of it as well. You don’t have to be particularly experienced as an adviser to know just what an inexact correlation this can be at times.
ASIC itself has recognised that ‘ethical gap’ of peer accountability needs to be closed. You can tick a box, but you can’t fool your fellow advisers when it comes to bad advice. Having a professional association as a co-regulator alongside government is a necessary structure, as we see in the medical, legal and other professions.
The days of dealer-hopping and association-changing are numbered. Soon, you won’t be able to practice as a planner if you aren’t a member of an association with an approved code. As a start, the FPA is the only body with an ASIC approved Professional Ongoing Fees Code.
Contrary to the claim that the FPA has helped increase red tape, members who abide by the code reduce it. ASIC have accepted that the ethical oversight of the FPA over its members is a more efficacious means of delivering quality assurance than its regulatory approach. But to get it, you have to hold yourself accountable to your peers. Are you good enough?
This isn’t hyperbole or contention – this is fact.
The FPA’s Conduct Review Commission might be ‘Soviet-sounding’, but every member can tell you that it operates with ‘glasnost’. The members of the CRC (which includes an independent barrister as chair) are clearly disclosed and its term of reference and processes are available for download for all to see.
The individuals recently censured aren’t the first to be held to account for their behaviour. Each year there is a detailed report on the activities and disciplinary actions of the CRC. What has changed? Now, it actually means something to be expelled from the FPA. Toothless tiger, no more.
Let’s just address quickly too the ad hominem relating to Mark Rantall. Anyone who thinks chairing a dealer group is cushy, either doesn’t know too much about dealer groups or indeed about the responsibilities of corporate governance. Full disclosure: I sit on two boards with Mark, and I was on the FPA board when he was CEO. There are few people who have worked as hard or with the skill as Mark for the advancement of financial planning. Don’t like how FOFA or the LIF turned out? You should have seen the versions that would have played out without the FPA and Mark arguing long and hard.
And it’s ironical that ifa calls the FPA ‘out of touch’ with its members. Six of the seven practitioner directors (in a 9 person board) are ‘non-aligned’, outside of vertically integrated networks. Maybe the real ‘single biggest issue’ is separating of product from advice, rather than vertical-integration?
The FPA does not prevaricate about its purpose, though it is a bit more nuanced (as life usually is) than the ‘either/or’ situation that ifa posits. Number one role of the FPA: ‘Represent the interest of the public’. Number two? ‘Represent the interests of members’. Believe or not, they can do both at the same time, but yes, if there is a conflict the FPA will put the consumer first.
Best practice trumps the people who pay the bills. Sounds like a profession, doesn’t it?
I think ifa needs to decide whether it wants to continue to take cheap shots from the sidelines or instead acknowledge the sort of hard, unglamorous work that the FPA has been doing for many years in order to build a profession that will improve the lives of our fellow Australians. Only one of those paths has any credibility with the public.
Patrick Canion is the CEO and part owner of AMP-aligned ipac Western Australia and a director of Intiger Group Ltd and the Future2 Foundation Ltd.
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