It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently. – Warren Buffet
The Royal Commission (RC) into banking and financial services appears to be overdue given the content that’s come to the foreground. One of the first things you learn about should you ever do a marketing degree is the concept of consumer sovereignty. It’s the idea that customer is king or queen and the decision to purchase and re-purchase is solely held by the customer. Customers who have been mislead or worse still hoodwinked, are rightfully unforgiving. And in the case of an RC where a light is shone brightly, consumers are more likely to become aware of what’s previously been hidden.
So to those independent and non-bank aligned financial planners who have cared about their clients and provided good advice I offer the below talking points on the RC. Without a doubt you’re going to be asked questions.
Talking points
Not all financial planners are the same and those who do the right thing need to speak up.
Independent AFSL holders
I work within a business that is licensed to provide financial planning advice. We’re not owned by a bank or an insurance company.
We have our own management team and procedures for providing advice.
We operate in the spirit of providing clients with personal financial advice and service rather than selling financial products.
Non-bank aligned planners
I work within a business that is privately owned, not owned by a bank or a large insurance company.
Our business pays ongoing fees to be a part of a group (dealer group) that is owned by a bank (or large insurance company). It has its own management team and procedures for providing advice.
We operate in the spirit of providing clients with personal financial advice and service rather than selling financial products.
The situation
With regard to the RC, it appears that some financial advice providers in banks and large insurance companies have cared more about selling a product rather than providing personal financial advice to their clients. There have been some other advice providers who haven’t shown due care either.
I’m disappointed by what I’ve heard within the RC is important and I look forward to the findings and outcomes. Clearly the bad operators in our industry need to be held to account and despite the regulation, this doesn’t appear to be happening.
A person’s financial life is important.
What you stand for and how you do things
Within our financial planning business, we take our responsibilities around providing advice and ongoing service seriously.
Talk about :
- Your compliance or professional standard processes
- The ongoing professional development requirements you take part in
- Your ongoing commitment to delivering the best advice and service you can
- The ethical standards you follow as a part of your professional association membership
The future
Talk about what you hope comes from the RC
- Removing the bad operators
- Improving accountability to those in banks and large insurance agencies who make poor decisions
- Removing conflicts of interest and product driven behaviours
- Banks may not be allowed to give financial advice or own AFSL’s
- Ensuring that Australians feel confident they’re getting good advice in all situations
Politically there’ll be a lot of fall-out from the RC too and I expect it will be greater than the RC into Union behaviour. This is largely because most Australian’s aren’t members of a union, but most Australians do hold a bank account and a superannuation fund.
Regardless of where you sit politically, we surely can all agree that the RC needed to happen.
If you’re a bank planner or in-house insurance agent, sorry I’ve got nothing for you right now and I imagine your customers are expressing lots of concerns to you about what they’ve been hearing. Those of us on the outside feel your businesses have let everyone else down. The best I can offer is to use the internal communications processes of your business to bring about the changes you’d like to see. Change can come from within. You shouldn’t need an RC to bring about change.
