Chris Browne, Catherine Robson, Paul Forbes, Michael Nowak, Eleanor Dartnall, Brad Fox, PJ Byrne, Tapel Cafer, Andy Marshall

On the eve of the Finalist showcase, AdviserVoice gathered together all of the finalists for the AFA Adviser of the Year and Practice of the Year Awards along with awards partner Zurich for a round table discussion to share ideas and canvass industry issues.

Here in the first of a three part series, we look at their view of the state of financial literacy and what financial advisers are doing to help raise standards of financial literacy within the community. (Read the second roundtable here, read the third roundtable here).

Who’s who

• Catherine Robson, Affinity Private – Finalist, AFA Adviser of the Year
• PJ Byrne, Mr Insurance – Finalist, AFA Adviser of the Year
• Eleanor Dartnall, Dartnall Advisers – Finalist, AFA Adviser of the Year
• Paul Forbes, Robina Financial Solutions – Finalist, AFA Practice of the Year
• Chris Browne, Rising Tide – Finalist, AFA Practice of the Year
• Tapel Cafer, Complete Financial Balance – Finalist, AFA Practice of the Year
• Michael Nowak, Joe Nowak Financial Services Group and National President of the Association of Financial Advisers (AFA)
• Brad Fox, CEO, Association of Financial Advisers (AFA)
• Andy Marshall, Head of Sales Strategies and Research for Zurich’s retail risk business

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AdviserVoice: First of all, I’d like to hear from you all how you’d rate your own clients’ financial literacy, specifically in relation to insurance issues.

Catherine Robson

Catherine Robson: We deal with professional people who are often very highly educated and take notice of financial issues. While they know their facts and figures, they find it difficult to apply that to themselves and their own behaviour, and so that’s why they need an adviser. And I think one of the blind spots for them is insurance because while, theoretically, they know that it’s a good idea, somehow, they think they are exempt from the laws of the universe and it’s not going to happen to them.

PJ Byrne: We have a client base that spreads across the Australian demographic so we do mums and dads through to business owners. In terms of clients’ literacy, it’s just about encouraging them to invest the time to

PJ Byrne

understand what they need to understand and get it right the first time, and that’s where advisers can make a difference – to tell them that you do get what you pay for.

Paul Forbes: I think people actually understand the broader context but I don’t think they understand how it applies to them. So, if I look at the people who come to us, some of them will understand it. They will have done quite well in their lives. But one of the questions they really don’t get is “How much is enough?” They actually don’t know when they can retire.

Chris Browne: We spend a lot of time in the early days just bringing them up to speed. We don’t talk about

Paul Forbes

insurance; we talk about “What’s your Plan B?” and I think that’s talking in their language as opposed to our language, and I think that’s really, really important. And, also, it’s important to know that there is no silver bullet and we need to consider things like internet clips on YouTube. We need to think about going out and educating people in their work places, and we need to think about the wider media.

Eleanor Dartnall: We had a huge financial literacy issue with self-funded

Chris Browne

retirees. Most of those clients were professional. You had to insist that they brought their spouse with them because the assets were also in their name, and I had quite a journey to get them to realize that I needed to teach their wives. You know, I had to use very mundane language. I would say “if you’re a 70-year-old engineer, it’s a monty that you’re going to go first and your wife’s going to be vulnerable to the first bit of rubbish advice she gets”. And then, they’ll say, “Well, will you teach her?”

AdviserVoice: What are the barriers to better financial literacy?

Tapel Cafer: When we’re talking about the younger generation, this is a serious topic that they actually haven’t listened to because it’s not really going to apply to them. So, you’ve got to find different ways to relate to them. You could be using comic sketch via social media to get to get to that audience.

Eleanor Dartnall

Chris Browne: The important piece is just meeting clients where they want to be met. I think, too often, we dictate how they interact with our business. You know, it’s the big board room or it’s the stiff meeting room and all that sort of stuff. Some people don’t care about stuff like that.

Brad Fox: I think technology is an enabler. We have to change how we reach out and social media can be part of that, but also reaching different audiences, choosing different language for different audiences, different communication means. We need to change the whole perception about insurance – from a discretionary purchase item in an Australian household to an essential purchase item.

Tapel Cafer

Tapel Cafer: One of the best forms of marketing we have found is actually peer to peer. We’re very big in the medical space and we do a lot of sponsorships at conferences and it’s an educational process. We have a large number of orthopaedic surgeons as clients and registrars as clients, they come in and speak on our behalf. Not only endorsing our company but endorsing the insurance industry because they now truly value the insurance industry because they have lived it. They have lived the trauma of someone being diagnosed or having the accident. They’ve also learned the insurance industry does actually pay – not watching a video, this is actually hearing it from their mouths.

AdviserVoice: How do you get to the people before they come in your door? How do get them to come in your door?

Brad Fox

Brad Fox: Whenever you’re trying to create mass influence, you’ve got to find where the gatekeepers are and how do we influence the influencers which are those gatekeepers. You know school teachers are the classic ones to meet kids.

Chris Browne: Over the course of the last twelve months, we’ve done 18 wealth workshops in small businesses and, sometimes, the person of influence – the CEO of that business – does an introduction and says,  “Bring in the team, they look after my financial affairs. I’m really, really pleased so I’ve invited them in to do a lunchtime session with you”. We’ve found that the amount of traction that we get with that audience is far superior to the opportunities where we’re invited in, we’re doing the presentation but we don’t get the endorsement from the CEO. We might get 50 percent that come along and meet with us, but it’s not the 90 percent that we would with the endorsement from the CEO.

Andy Marshall

Andy Marshall: I did a presentation this week and asked the audience if they knew the Risk Store stats on how many claims were paid out last year? The audience were financial advisers, it was a room of 125 people and no one knew. No-one, that’s appalling because you should know that but it’s also what you then do with that stat because with that stat you can actually make it real and say, “What that actually means, Mr. and Mrs. Client, is that 170-plus families got X million dollars paid out a day.” That would join the dots. They know bad stuff happens but it’s about the reassurance piece and I think what we need to factor is how do you reassure people that there’s something really positive from interacting with an adviser?

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The Association of Financial Advisers Awards will give separate recognition to the best individual adviser and to best advice practice for the first time this year. The winners will be announced at the AFA National Adviser Conference, to be held in Cairns, October 12-14. Zurich has proudly partnered with the Adviser of the Year Award since its inception in 2003 and now also for the inaugural Practice of the Year Award.

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Christine Hornery

Financial planner, Christine Hornery, CFP, director of FMS Group and Association of Financial Advisers (AFA) 2012 Female Excellence in Advice Award winner, has welcomed comments made by Australian Securities and Investments Commission (ASIC) Chairman, Greg Medcraft last week that financial literacy for children is a top priority.

Commenting on a speech[1] made by Mr Medcraft to the Australian Bankers’ Association (ABA), which listed educating the next generation through the formal education system as priority one of ASIC’s 2014–17 National Financial Literacy Strategy, Ms Hornery said it has often been difficult to educate her adult clients, let alone teach them to pass on financial literacy skills to their children.

“By way of example, some people do not seem to understand that credit cards are loans on which they pay very high interest,” she said. “These people feel that the cash available on their credit cards is their own money to spend as they like. If this is any indication of the type of lessons parents are teaching their children, then we have a serious issue coming our way in terms of debt.”

Ms Hornery therefore believes more attention needs to be paid to addressing these basic issues when children are at school. “Despite many well-intentioned attempts, our school system to date does not appear to have significantly addressed the practical financial responsibilities that an individual has throughout his or her lifetime,” she said. “Financial literacy isn’t about the theory, it’s about the practical – the information children will learn that will actually give them the knowledge and resources to make astute decisions around credit cards, car loans, home loans and budgeting.”

In his speech to the ABA, Mr Medcraft said that under ASIC’s MoneySmart Teaching program, more than 10,000 teachers have received face-to-face professional development and over 40,000 copies of teaching resources have been distributed to schools nationally. Under the action plan in the 2014–17 Strategy, he said ASIC’s goal is to train a minimum of 20,000 additional teachers, with the ultimate objective of teaching financial literacy from kindergarten to Year 12, in all 10,000 Australian schools.

Ms Hornery applauded the move, saying, “We need to start teaching our children that by planning and budgeting we can live the lives we want to lead for longer. Learning how to plan for the future is an invaluable skill.”

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[1] Medcraft, G 2014, ‘The 2014–17 National Financial Literacy Strategy: A speech by Greg Medcraft, Chairman, Australian Securities and Investments Commission [to] Australian Bankers’ Association (ABA) Broadening Financial Understanding Conference’ 3 September, viewed 9 September 2014,  http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/National-financial-literacy-strategy-speech-published-3-September-2014.pdf/$file/National-financial-literacy-strategy-speech-published-3-September-2014.pdf

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Peita Diamantidis

A leading financial planning firm has joined the Australian government in the fight to boost the financial literacy of Australians, as the Australian Securities and Investments Commission prepares to release the government’s National Financial Literacy Strategy for 2014-17.

Sydney-based financial planning firm Caboodle Financial Services has developed a range of educational tools which will be launched on May 1 and features a new book called Finance Action Hero: Basic Training

The book forms part of the Zaptitude range of consumer products, which includes seminars and coaching clinics, smart phone apps, webcasts and a support group made up of financial planners, bloggers and ordinary people called the Zaptitude Tribe.

According to Peita Diamantidis, author of Finance Action Hero: Basic Training and managing director of Caboodle Financial Services, financial advisers are in a unique position to help raise the financial knowledge and skills of Australians, and positively influence their attitudes and behaviour when it comes to money.

“So many people we encounter as advisers work hard and earn good money yet they have nothing to show for it,” she said.

“They need to be compelled, prodded, zapped and stirred into action but the minute they decide to try and take control of their finances, they’re overwhelmed by all the information out there. They know they should do something but like a deer in headlights, they’re mesmerized by the oncoming catastrophe. They simply don’t know where to start.”

The Zaptitude range is one small part of the solution, Diamantidis said, urging other advisers to get involved with financial literacy initiatives including the national program, which is set to be unveiled imminently.

In 2013, ASIC undertook an extensive public consultation process to review the existing financial literacy strategy which was set in 2011. A new and updated strategy is currently in draft form and is expected to be released soon.

“Zaptitude is the ability or knack to sort out one’s money stuff and it is the cure for financial paralysis, which more than 50 per cent of Australian adults suffer from according to our proprietary research,” Diamantidis said.

The firm’s research also found two thirds of Australians don’t understand the messages being communicated by the financial services industry.

Diamantidis said her book was a training manual not another personal finance title focused on investing.

“Financial literacy and Zaptitude is about helping people get their financial house in order and meeting people where they are at,” she said. “We want to provide full encouragement and inspiration to people and keep pushing them along.”

Finance Action Hero will be available at selected retailers and online at Amazon, iTunes and www.zaptitude.me .

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FSC to launch Indigenous literacy program.

The Financial Services Council (FSC) has announced a long-term partnership alliance with First Nations Foundation (FNF) to help improve the financial literacy of Indigenous Australians.

Financial literacy is a key contributor to social exclusion of Indigenous Australians who are significantly more disadvantaged than other Australians. This was highlighted in a report by the Centre for Social Impact in 2012 found that 43.1% of Indigenous Australians surveyed were either severely or fully socially excluded compared with the national average of 17.2 %.

John Brogden, CEO of the FSC said: “Access to appropriate and affordable financial products and services such as a transaction account, insurance and a moderate amount of credit can make a significant difference.”

The Financial Services Council will be providing funds and resources to the First Nations Foundation to help expand its adult financial literacy program, My Moola, for members of Indigenous communities.

The program contributes to improved employee retention, and a valuable investment with flow-on benefits to the individual, families, and the company as staff improve their personal financial matters.

“Knowledge and confidence in using money, the financial system and its products are keys to managing a budget, planning a work career, running a business or building long term assets, such as a houses and superannuation,” Paul Briggs, chairperson of FNF said.

Trevor Pearce, CEO of FNF said: “While most Australians can relate to the concept of being the first person in their family to obtain a degree, for some Indigenous people they are the first person in their family to enter the workforce.”

“Through the First Nations Foundation program we are witnessing people transition from intergenerational dependency on welfare, mums returning into the workforce and young people getting their first part-time job and in some cases, to huge salaries from the resources industry.”

Mr Briggs also said: “This needs to translate into wealth creation within Indigenous communities for it to be sustainable economically, socially but most importantly culturally.”

Since 2001 members of the FSC have raised $1.9 million for two charities  ̶  Schizophrenia Research Institute and the Inspire Foundation. The FSC engaged Hailey Cavill, managing director of Cavill + Co, to review its charitable partnerships and concluded that it would focus on financial literacy. FNF was shortlisted for a partnership with the Financial Services Council alongside seven other major national not-for-profit organisations that deliver financial literacy programs.

Mr Briggs also said:  “We need to identify what we want our future to look like, in order to feel safe, to feel connected and to have a sense of ownership and control over our destiny.”

“Our vision is for an Australia in which Aboriginal and Torres Strait Islander people are valuing their unique and integral contribution to Australia’s nationhood, have economic prosperity, a vision for money management,  careers and jobs, and a strong sense of emotional and spiritual wellbeing,” he said.

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A recent national survey conducted by RaboDirect revealed just how real the need is for financial literacy to be taught in schools, with Gen X and Baby Boomers outed as the generations currently struggling most with debt issues. The question then stands – would the outlook for these generations have been different if they were taught practical ways to deal with their finances from a young age?

Key points:

• 80% of Australians believe that financial literacy should be taught in schools (according to the 2012 RaboDirect National Savings and Debt Barometer)
• RaboDirect supports the work of the government in regards to teaching financial literacy in schools and calls on others to get behind the work of Moneysmart
• RaboDirect highlights the need for parents to be involved in the process of teaching kids how to deal with money and finances – parents are some of the most influential ‘teachers’ in children’s lives 
• RaboDirect also highlights the need for all Australian’s to take stock of their financial situation, and take positive steps to improve their outlook. Prepare a budget, set savings goals and start saving today.

Renee Amor, spokesperson for RaboDirect said:

“We are pleased to see today that parliamentary secretary, Bernie Ripoll, has released the details of the Moneysmart teaching aid for schools. Our research clearly supports the need for more to be done to teach Aussies how to deal with savings and debt with less than half of the population saying they are comfortable with their finances. However this kind of learning shouldn’t just be confined to the classroom – parents are some of the most influential teachers kids will ever have, so talking openly about money and teaching practical savings tips at home is also key to ensuring our future generations are financially savvy.”

“If financial literacy had been part of the curriculum when Gen X and Baby Boomers were going through school, we might find that they would have a very different financial outlook today. As it stands, our research shows that a number of Boomers are carrying debt into retirement but less than a third of this generation are actually saving for retirement. The message is simple – all Australians can take action to improve their financial well-being and you are never too young to start.”

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Boutique super fund AvSuper has unveiled a sophisticated online calculator that sets new standards in member service and engagement via an intuitive and richly functional online tool.

In the first three days of release, more than 10% of the Fund’s members had immediately logged on and used the AvSuper Calculator, demonstrating an engagement with members that will drive financial literacy and further innovative services.

AvSuper CEO Ms Michelle Griffiths said “We are extremely pleased to launch the AvSuper Calculator to our members. Being first with this dynamic and innovative approach not only introduces a new and exciting frontier to our fund, it benefits AvSuper members through assisting better informed decision making about their finances.

“We are delighted with how effectively decimal worked with us to provide an AvSuper solution customised specifically to our members’ needs incorporating our Fund rules on areas such as insurance. It’s an exciting phase two of our Member Advice Solution with continuous development for additional features already in the planning stage. Because we remain focused on the needs of our unique members, we can offer highly tailored solutions for our members and the unique needs of the aviation industry which cannot be matched elsewhere.

“Member feedback during a trial and since the launch has been wonderful, with constructive suggestions for future developments as well. We are genuinely excited about the future prospects that this technology represents for our fund and our members.”

decimal CEO, Mr. Jan Kolbusz, applauded AvSuper for its forward thinking on behalf of members.

“What we see here is a truly member centric online calculator, that is fully integrated – including from a compliance, workflow and SOA viewpoint.

“In fact, AvSuper has deployed a highly functional, integrated system that removes data duplication, eliminating annoying downtime for members. Various consoles are available for Fund staff to allow immediate access to SOAs and for monitoring member and SOA activity. This breadth of capability is available because all the consoles run off one set of databases.

“The member is engaged from initial setup of entering minimal details and financial information through to the optional action point of consultation with an AvSuper Member Advice Consultant. The calculator allows the Fund to then continue from the point that the member left off.”

Mr. Kolbusz said the strong partnership between decimal and AvSuper has resulted in the delivery of a new best standard online tool for member service and engagement, combined with a system that makes a quantum technological leap in the age of solving personal advice issues for all Australians.

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Key points:

• With a third of Aussies feeling ‘constantly in the red’ (according to the survey), this subject is long overdue to equip the next generation with the skills required to keep them in the black
• The sooner we can educate the next generation in financial planning  the better. We are already seeing Generation Y struggling with personal money matters, according to the survey:
  • Younger age cohorts are more impulsive when purchasing on their credit cards than older generations
  • Only one in five Gen Ys have received professional financial advice, compared to over half of baby boomers
• With Generation X the most likely to always feel in the red (32 per cent) and least likely to budget, the survey highlights the implications for those generations not taught financial literacy at school
• Greg McAweeney said: “Learning financial planning in school is a life skill that will never go to waste and we agree with the Government’s decision to include it in the national school curriculum.  We want Australians to feel empowered about their finances not overwhelmed and challenged.  In order for this to be achieved we need to properly educate ourselves; where better to do this than in school.”

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