The Moran Principle

This week, an interview in Investor Daily helped to shed some light on the agenda of the industry super network. The head of the organisation clearly indicated that once they have sorted out financial planners and FOFA, they will be coming after self managed super funds. "I tell you one thing: once we get this commission thing [FOFA] out of the way, we are coming after self-managed super, not because we want to burden it in any way, but we want them to be on the same footing as industry funds," is the quote used in the article and attributed to Garry Weaven. (see http://www.investordaily.com.au/11846.htm ) This is of concern on so many levels I hardly know where to start - but here goes... Mr. Weaven clearly thinks that "this commission thing" is his problem to solve - not the regulator or government. Since when does one product provider in the market get to increase their market powers by changing (setting) government policy to the detriment of other providers. ...

Hi - long time no speak... I was wondering which way people were going to go regarding the FPA proposals to limit memberships to CFP's or AFP's (those who are enrolled in the CFP program)? I guess you will get some idea of my views on this, but I am worried that there will be a lot of vested interest in maintaining the status quo. After all, when a body such as the FPA transitions from an industry body to a professional association it carries a lot of baggage. There surely can be no doubt that something has to be done about our reputations as financial planners and advisers, and the FPA is the logical body to be at the front of this. However, the lack of clear action in the past has left many wondering if they are up to it. My position is that until the proposed changes are made, the FPA would not have the credibility to be able to actively lobby our position. Most of us know that most of our clients like to deal with us. In fact, most are strong advocates for us when anyon...

I am a bit furious at the moment. On the 30th June 2010 I attended the Department of Treasury’s Melbourne briefing on the “Future of Financial Advice” (www.futureofadvice.treasury.gov.au). I was hoping to hear about Treasury’s view on the future of our industry/profession. I took a couple of hours out of my day on the last day of the financial year to attend because I am committed to the development of my profession. At the table in front of a group of about 100 interested people sat 3 Treasury officials and one ASIC representative. I have no issue with any of these representatives (although I must say that the ASIC rep did not open her mouth and seemed less than interested) – my problem is that the entire session was overtaken by life insurance salespeople panicked by the prospect of a ban on commissions. I use the term life insurance salespeople, rather than financial adviser/planner, on purpose as this is the only way that these people could be characterized. It was an embarra...

Hi All, I have linked an article I found recently on the Financial Services Journal which succinctly comments on many of the issues we all face as we develop our industry into a profession. His comments on home visits are particularly relevent - how many of us have made after hours appointments only to find the 'client' is a 'tyre-kicker'. I hope you find this interesting... http://www.fsonline.com/fsj/articles/110108OHara.shtml All the best, Paul

There are four educational cornerstones that are unique to Financial Planning. The first is investment planning – not investment selection as many think, but the matching of appropriate investments and savings strategies to match a client goal or goals. Secondly, increasing complexity in the area of superannuation and retirement income streams (at odds with our previous Treasurer’s view…) has meant that this has become an area of specialist knowledge. Thirdly, financial planning emerged from the distribution of life insurance products and advising on appropriate personal insurances has always been a natural area of expertise. Lastly, the demography of our client base places us at the forefront of dealing with retirement, and therefore Social Security, issues. This is rapidly expanding into assistance with aged care advice as older Australians are faced with a complex system of means tests. For this reason, Social Security and Aged Care becomes the fourth cornerstone. The ancillary ar...

The industry super network (ISN), in its continued assault on financial planners, recently released a self commissioned report from Rice-Warner that states financial planners will be better off under their proposed system of advice. The report also indicates that the nation may be $117 billion better off over the next 15 years under this system. Further, they have released an internal research report – Supernomics – that suggests that competition should be outlawed as the continued use of higher fee super funds implies competition has failed. The reports, however, do not stand up to much scrutiny on a number of grounds. The ISN suffers from a severe case of financial myopia. They seem to believe that superannuation is the source of the only significant financial decision that individuals need to make and further, that it should be seen in isolation from other financial decisions. Having worked as the executive manager of advice in a quasi-industry (not for profit) fund, my experien...