The financial planning industry has always been a solution looking for a problem.An industry, in part, created as an escape route for large insurance companies whose reputations were severely battered in the early nineties.( Yes, folks, back then there were also senate inquiries, but this time into the insurance industry and also prompted by TV current affairs show outrage.) So a strategic exodus was conceived out of one sullied profession, insurance sales, into a shiny new, financial planner designation. Within this framework, vesting periods, 21F super funds and two-year premium commissions could thrive under a veil of perceived professionalism. What customer could ever doubt the value of the euphemistically named " savings plan' when advised to do so by such an 'expert' as a financial planner. (paperwork, compliance and government regulation at the time - NIL)
But like any new industry, it attracts competition. And our banks were keen to jump into the rivers of revenue made possible by compulsory super. But it was not until late 90's that they all gave up on organic growth and decided to buy into the 'party' and scale up. The industry consequently exploded, with jobs aplenty allowing all those self-employed 'financial adviser's( nee salespeople}, to suddenly broaden their employment horizon's within the banking environment. And be paid a regular salary!
And so the seeds were planted to create the corporatised behemoth that passes as the advice industry today. An industry that has in effect, been able to create and sell their version of "bottled water'. A generic, extraordinarily limited service, presented with all the packaging and hullabaloo of professionalism but just plainly isn't. An industry whose core document is an SOA rather than a financial plan and has elevated the word 'disclaimer' into no. 1 within the industry lexicon.
And any executive within this industry who has been involved in it for longer than a few years will be completely conversant with the failings being shown at the current Royal Commission. But would have had absolutely no reason to change it, as the money was far too good. It is only when the public is astounded and shocked by the behaviors, do they suddenly sing a different song, albeit unconvincingly. Such as one executive whose profuse apology formed part of his written statement, and was asked, 'what exactly are you apologising for?' His response, " I'm unsure". And my personal favourite, when an executive was asked by counsel if they described themselves as a salesperson, and was quick to indignantly responded "no". Only to be informed by counsel, that this was how he had described himself, on his LinkedIn profile. oops!
In my, opinion the sooner financial planning evolves into a small business, owner operated the better for all concerned.
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