Lawyer claims financial planners unfairly targeted

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”.

Being a solicitor I’ll start with a disclosure. I’ve worked with financial planners for over 30 years. I helped establishment the FPA and its predecessor the IAFP. Before you howl that I’m therefore biased, let me tell you that I’ve got ahead of you and thought about that before penning these comments. I’ve come to the decision that I’m not.

I don’t get the majority of my work from financial planners and I’d like to think that after 40 years as a solicitor I know when I’m advocating for a client and when I’m not. Here I’m not. I’m simply doing something for financial planners that the Royal Commission doesn’t allow them to do – have someone speak on their behalf.

It seems to me that those 30 years’ of connection with financial planning and those who practice that discipline have given me some insight that can be lost in the current emotional context.

There are in the order of 18,000 “financial advisers” in Australia. That figure is pretty rubbery but was the one used by the Ripoll Report in 2015. That report also said that about 85% of them work as an authorised representative or an employee of an AFS Licensee. The rest either have their own AFSL or don’t need one.

How many financial planners have appeared before the commission? I don’t know either but it’s not many. It’s a ridiculously small percentage of the total. And it’s a skewed sample anyway – they’re the ones the ‘counsel assisting the commission’ have the dirt on.

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.

They are bombarded with change constantly in the areas they need to understand – securities and investments, superannuation, taxation, social security, estate planning … the list goes on. Most of them do much, much more professional development than your average solicitor. They need to in order to keep up with that constant change.

They are allowed into their clients’ inner-most confidence; things clients wouldn’t tell their own mother. But most financial planners handle that deeply personal information with all the integrity expected of them and with considerable empathy as well.

Do they get it right one hundred percent of the time? No. Who does? Do they put themselves and their self-interest ahead of their clients? Some probably do. But the number is a minority – a substantial minority. Do they make money from their efforts? Damn right they do! Why shouldn’t they? They work hard at providing a very valuable service and should be well-compensated. If we want more and better financial planners we need to remunerate them well.

Frankly it would be a tragedy if the public were left with the view that the average financial planner was someone not to be trusted. Not only is that untrue but it has the potential to deprive Australians of the very valuable services good financial planners offer. I was saddened to hear an accountant at a conference the other day tell me she doesn’t tell clients she’s a qualified financial planner because she believes they’ll think less of her. That’s an indictment on our inability to convey the real position.

In a world where home ownership is waning and public offer superannuation is beset by curiously high costs and fees from ‘fund managers’, the financial planner is the last line of defence for clients wanting to ensure their financial health through sensible superannuation investment and good strategies with money. And they don’t just help the rich. Many have a deep understanding of the turgid, Kafkaesque social security rules because their clients need access to social security. Those clients are not wealthy people.

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.

The solution comes with public education. Twenty years ahead of her time the Queen of Australian financial planning Gwen Fletcher tried to get the old Trade Practices Commission (now the ACCC) to legislate a definition of financial planning in the mid-1990’s. Had it agreed to do so we’d have a lot less problem now.

Clients need to understand the difference between real financial planning and simply product advice; in the way they understand the difference, say, between asking a chemist for a recommendation of a product to fix their ailment versus seeking advice from their GP.

That confusion about that difference has been rampant among our legislators and regulators in all my time helping the industry and amazingly it continues. The educational requirements of FASEA and the refusal to acknowledge substantial experience of long-term financial planners yet again misses the point.

The problems the Royal Commission has highlighted have nothing to do with the lack of education of financial planners. They are much more to do with greed or with demands by employers that their product sellers, masquerading as financial planners, put the employer’s interests ahead of the clients.

Financial planning should be a profession which means substantial education, a formal entry requirement, a clear understanding of the practice requirements, a strong enforceable code of ethics and substantial penalty for those who misrepresent they are part of the profession when they are not.

All of these things are within reach but let’s not act so quickly or blindly that we destroy the businesses of many excellent financial planners simply because the educational requirements are too onerous for them or we destroy the reputation of the whole of the financial planning discipline just because of the appalling behaviour of the minority.

Most financial planners rock! We simply need to help people understand the benefits of using financial planning and identifying a real financial planner from a faux one.




What a top article, why cant the associations put something like this into the mainstream media? Thank you for writing this, very well articulated and something we need at the moment.

Agree, great article, well written and touches on all of the issues in our industry and the proposed fixes. I wish the FPA and AFA had the budget to get something like this out to the general public. Maybe it's time for the 2 associations to combine, pool resources and provide one voice for us.

No mention who this solicitor is and who he addressed his great article to. He has covered everything nicely. Obvious he knows this industry very well. This man should be knighted!! He should have been in charge of the RC and he SHOULD be in charge of the meaningless associations who have done zero for me and no doubt many others during my nearly two decades in the industry. Many in the industry who think like this and know it just as well but sadly not many in the industry who have come out to speak like this. Funny someone not from the industry speaking the truth as many seniors from the industry are still hiding, too afraid of ruining their 'reputations' or jeapordizing their businesses, positions or afraid of upsetting their masters higher up the chain. Never heard of Gwen Fletcher either who he has mentioned as the Queen of Australian financial planning.

Yes a very good article. However, apologies for being somewhat negative on this post, but there are way too many blood sucking leaches in this industry. Leaches that have made a business selling compliance services to licensees whilst driving up advice costs and red tape. Leaches selling marketing, training and even selling advertising. I wonder if some of these leaches are now finally realizing that the corpse they've been sucking is dying. Time to speak up leaches. Sorry that I'm not slapping you on your back because this host has well and truly be feed on over the year... but a little support would be truly welcomed for a change.

The Financial services lawyer is Peter Townsend. Not repeated in the article but if you go back to the brief that you clicked on to get to the article you will see his name. Thank you, Peter. They were words even the most-staunchest financial planners needed to hear right now.
In the 33 years I have dedicated my life to the development of financial planning and to assisting my clients make the right financial decisions to improve their future and enjoy their retirement stress free I have never felt so disillusioned. The only thing that has kept me for wanting to take my savings and run is the wonderful clients who in many cases have relied on me for over 25 years.
The dedication of our clients, the continual referrals to their family and their friends indicates that they are more interested in what we do for them, not the pay structure chosen.
I was lucky enough to many years ago have a brief encounter with Gwen Fletcher which made me seek out where she is today. Unfortunately, she is not with us now, and hopefully she can’t hear what is going on in the Royal Commission as she would be turning in her grave. What I did come across is a book written by Julie Bennett titled ‘Running Between the Raindrops’. It is a fantastic story of Gwen’s input to developing the path way for what the Professional planner does today. A must read.
Throw the boy at the cowboys, don't just ban them for three years. Jail them for life. The Professional Planner doing the right thing does not need more red tape and regulations.

Endorse the article and those comments already made.

Peter, thank you for taking your valuable time to write this article. It is how many of us feel and conduct ourselves, but are constantly frustrated because we have no clear centralised voice being heard. The RC treated the FPA and AFA with contempt and did little but paint them as part of the 'problem' i.e. if the RC is a witch hunt, they treated the associations as the coven's embryonic cave.

I and I am sure many other planners would greatly appreciate it if you could attempt to get your article into main stream media, and submitted to the second part of the RC. Love to see someone with your experience, background, professional expertise and grasp of legalese be called in front of the RC to set them straight on a extremely wide range of matters, without the obvious bias they have of calling only those groups they have dry powder already on beforehand.

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