And that’s why I maintain that regulation won’t lift our collective reputation and our individual service to our clients unless something inside us all changes.

At the end of my Grow Your Business program on the weekends on Sky Business, I always end the show with “if nothing changes, nothing changes”. Yes, I know it is a cliché but it is the kind of provocative
advice I offer for many of us who are weighed down by complacency. And the change I believe our industry is crying out for is leadership.
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I reckon MLC’s boss, Steve Tucker, showed it when he railed against commissions years ago and put his team on percentage fees. Sure the purists can argue that flat dollar charges are purer but at least he was
prepared to question the prevailing paradigm.
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However, the leadership that is overdue in the financial planning fraternity is the one that should be practised and learnt on a daily basis in every financial planning business in the country.
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It is an irony but many of us think leadership is the preoccupation of the likes of executives of big organizations but the truth is leadership is needed when you lead a small business, a sporting team, a classroom and a family.
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But wait there’s more.
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We need leadership skills when we deal with our clients. In fact, we are in a leadership position when someone comes through the door hoping to put their financial life in order. We clearly have to be great at our product knowledge but we also have to be aware that these people, who are paying us to fix up their financial future, want us to lead them to a better position.
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So, how does someone engage with leadership?
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The first step is to admit that you have a leadership inadequacy but how do you know that? Well, if you have trouble influencing your teenage sons and daughters, your Gen Y staff or family or even your partner in a relationship, you have to be realistic that it could be your leadership that is letting you
down.
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If your conversion rate of customers is not as high as it should be, well, once again it could be your leadership that needs some work. Okay, if you can be honest with yourself that your leadership quality
could be the missing link in your life and your business then don’t delay by changing what you are currently doing.
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If you are not reading books on leadership or listening to DVDs on the subject when you are driving then you are misallocating your precious time.
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In Dubai two years ago, I MC’d a conference where the US leadership guru — John Maxwell — was speaking. He has penned a number of books that have been on the Wall Street Journal’s and New York Times best seller list and he has sold over, wait for it, 20 million books! My favourite is The 21 Irrefutable Laws of Leadership, which the great Stephen Covey, the author of The 7 Habits of Highly Effective People, said of the book: “It will change the way you live and lead.”
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To me Maxwell’s greatest advice was: “Leadership is developed daily, not in a day.” When that happens you change permanently and the influence you wan to have on your customers, your staff and your family becomes more effective. If you want a great business, Maxwell says, everything rises and falls on
leadership — everything! He argues that if you are a 5 out of 10 leader you will probably have a four out of 10 business, but never 6,7 or 8. And forget 10!
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This is my number one business tip — if you get leadership right, you will know what to do, who to recruit, where to go and who you need help from to build a great business.  For more business tips from Peter Switzer, visit www.switzer.com.au

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The AFA Member Pack is designed to help all advisers, whether they are members of the AFA or not, to understand:

• FOFA key facts and key dates
• Impacts of FOFA on consumers and advisers
• AFA’s role and policy position

It provides a clear way forward for advisers, so that they can future proof their practices as well as have an impact on the final FOFA outcome.

AFA CEO Richard Klipin said, “The original intent of FOFA was to create a transparent market that acts and operates in the interests of consumers, following Storm, Opes Prime and other key market failures. However, the FOFA rhetoric has not been matched with strategy and consumers’ real needs have fallen on deaf ears.”

Mr Klipin said that to ensure appropriate outcomes for all stakeholders, the AFA had commissioned a number of research papers including Back to Basics and Risking Everything which had provided the Government with clear, concise and articulate insights into the world of consumers and advisers.

“Our consumer research shows that FOFA will drive up the price of advice and increase red tape for consumers, advisers, licensees and product providers, for no discernable consumer benefit,” Mr Klipin said. “FOFA has failed to strike the right balance between improving advice outcomes on the one hand, whilst retaining access and affordability for all consumers on the other.”

Mr Klipin said the debate is still in full force, but has moved from a policy to a political debate.  “We must ensure that our collective voice is heard,” he said.

AFA President, Brad Fox said that AFA members have an expert understanding of consumers and their needs. “This year the AFA celebrates its Diamond Anniversary. This means our members have advised consumers at the coal face for the past 65 years. We therefore have a deep understanding of consumer expectations and the transformative value that quality financial advice provides. These are the interests that we will argue for, so that consumers retain the right to affordable, accessible advice.”

The AFA FOFA in Focus Member Pack was compiled by the AFA in collaboration with members of the AFA leadership team, practitioner members, licensee members, product partners and technical experts from across the market.  Copies are available free to all advisers, whether they are members of the AFA or not. To download a copy, click here

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The Financial Planning Association (FPA) welcomes all moves that promote the value of financial planning advice, encouraging ISN members to make sure their advice meets with the professional standards of the FPA.

“We know it’s difficult for Super Fund members to trust whether they’re in the right fund or getting the right advice,” said FPA CEO Mark Rantall. “However cost and the way a Financial Planner charges for their services should not be the primary focus as is the case with the current ISN advertisements.”

“If there is a crisis of confidence in Superannuation funds, financial markets and advice more generally, it should encourage people to make sure they’re getting the best advice and that the advice they’re getting takes into account their own and their family’s complete financial circumstances, not just their superannuation needs.”

The FPA continues to receive widespread support for its new strategic plan to make it a true professional association, providing even greater confidence in professional advice for all Australians. The introduction of the new strategy, to be voted on by members in April, will be supported by a national advertising campaign to promote the benefits of seeking advice from FPA members.

Research shows that financial planners with the full range of FPA expertise are the preferred source of advice for people considering their retirement.

The FPA offers a checklist for consumers whether using a certified financial planner or an adviser within your Super Fund:

1. No client should pay fees or commissions (or cross subsidised fees from other fund members or any other form of fee) if they are not in receipt of professional services.

• • Check your Super Fund statement and with your Financial Planner to make sure you are not paying fees for services you don’t get.

2. No client should have their investment advice services paid for by Super Funds or any other product providers because you then can’t be sure whose interest they are acting in. FPA members have already committed to full product and advice transparency and the banning of commissions for investment products.

• • Check with your product provider adviser (Super Fund or other) to make sure you’re paying for the advice you receive – you deserve to know they’re interested in only your future and not theirs or other members.

3. No client should be forced into the formula advice a product provider or financial planner wants to offer you. Your retirement future is all about you and your family and you deserve to make an informed choice about the right services for you. In many instances the right choice will be to call your super fund and get the advice they can offer only within the scope of their product capabilities.

• • Check with your advice provider (Super Fund or Financial Planner) and ask them about the choices of advice and financial strategies for your future. It’s your choice and your future.

4. Every client deserves the maximum consumer protection available when getting advice.  Financial Advice is complex, even when it’s only about Superannuation. Different product providers and Super Funds have different limitations on their liability for the advice they give you. Only Financial Planners, fully authorised under the Corporations Act are subject to the full obligations of the Corporations Act and only FPA members are required to maintain professional obligations over and above the law.

• • Check with your Financial Planner (they might work for your Super Fund or outside of a product provider). Is the advice they’re offering you subject to Corporations Act and have they met the full professional obligations as members of the FPA?

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The Financial Planning Association (FPA) is confident that its members will vote resoundingly in favour of adopting a new strategic plan to make it a true professional association.

The FPA will speak with over 2000 of its members throughout March as part of its National Roadshow, providing planners an opportunity to hear first-hand on the proposed new three-year strategic plan, which aims to elevate financial planning as a universally respected profession.

Feedback from the initial roadshows has been overwhelmingly positive, with over 85 per cent of attending members stating they would vote in support of the plan, which would see only individual planning professionals with the right to vote going forward.

The new strategic plan was announced at the FPA 2010 National Conference in November following a long-term engagement process with members.

Seventy five per cent of members who vote need to vote “yes” to adopt the strategy, which removes the Principal membership category, at an Extraordinary General Meeting (EGM) on 7 April 2011. Members can vote in person at the EGM in Melbourne, or lodge a proxy electronically from 14 March until 5 April.

In association with the strategy plan, the FPA has launch a new brand and advertising campaign to position FPA members as trusted professionals.

Mark Rantall, CEO of the FPA said:

“Clearly the members are very much in favour of the new FPA and its journey towards building Australians’ respect for financial planners as trusted professionals.

“This is a once-in-a-generation opportunity for change and we’re calling on all members to vote yes for their professional recognition.”

“We look forward to members continuing to provide us with feedback and communicating their thoughts as we work away around Australia over the coming weeks.”

Peter Roan CFP, Chapter Chair of the FPA said:

“It is time for all members to unite and show their professionalism and support for the FPA as the peak professional body for Financial Planning professionals going forward.”

“We now have the opportunity to do this, it is black and white … and it is time.”

Rodney Lavin CFP, FPA Chapter Chair in Gippsland and the inaugural CFP Professional Ambassador said:

“Financial Planning has come of age and it is logical that the FPA must now concentrate on becoming a professional organisation rather than just an industry group.

“To raise the bar on eligibility of membership is a good thing for our profession and I endorse it whole heartedly. I applaud the FPA board on their strategy and I am confident we are heading in the right direction”

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Two weeks after launching, one hundred and twenty three practices have so far pre-registered as an FPA Professional Practice, and Professional Partner commitments have been received from large principals including most of the dealer groups within the ANZ, Westpac, NAB,  CBA, AMP and AXA groups.

The FPA announced a new three year Strategic Plan at the FPA 2010 National Conference, Your Wavelength. The immediate response at the conference was positive, and this reaction has grown since.

The FPA Board launched the three year strategy alongside a new brand and advertising campaign to position FPA members as trusted professionals. The FPA engaged in lengthy discussions with members ahead of the launch, refining proposals and ensuring the launch would be well received by members.

Mark Rantall, CEO of the FPA said:

“Our determination to make the FPA a true professional association has resounded with our members and the new strategy has received the broad support we had hoped for.

“The feedback the FPA received during and since the conference shows that our members believe we are going in the right direction for the profession. We continue to receive support from all involved including individual members; chapters, both small and large principals, other associations, government and regulators.

“We expect the New FPA strategy to result in significant growth of AFP and Future Planner members, and increased CFP enrolments. The initial rapid take up of Professional Practice pre-registration is a good sign, and there is anecdotal evidence of both increased membership growth and increased interest in CFP enrolments since the launch. Last year close to 500 young people joined the FPA as students or Future Planners, and we expect this rapid growth in young people who are the future of the profession to continue due to our increased focus on individual professionalism”.

“We are particularly delighted with the initial rush of support for the FPA Professional Practice concept.  The FPA brand will become the mark of trust and seal of quality for financial planning practices, enabling Australians to be confident in the higher professional standards of FPA members. It is great that there are already 123 top quality local practices around the country that will commence using the new FPA brand from July 2011 onwards.

“We are asking members to continue to provide us with feedback over the coming months, via the consultation paper and member survey, by emailing us, or by attending the roadshows being held around the country in March.  In time for the roadshow, we expect to have the next round of advertising concepts for member feedback.  Ultimately, the new strategy is the members’ decision and we hope that the Extraordinary General Meeting on April 7 2011 will bring a positive result for the entire Financial Planning industry.”

Boutique of Financial Planning Professionals Group (BFPPG) president, Claude Santucci, said:

“The Boutique Financial Planning Principals Group (BFPPG) has long held the view that the FPA should represent financial planners in a professional capacity and should not simply be an industry body. The FPA’s new strategy is a positive step in that direction and is supported by the BFPPG.

“It is essential that financial planning be recognised as a profession by the public and government. Strengthening the profession at the member level is the best way to achieve that recognition and the FPA’s new strategy is directly member focussed. It encompasses many of the changes that the BFPPG has sought over the years and we will work hard with the FPA to ensure that those changes benefit the public and financial planners.

“The BFPPG and the FPA have a long relationship built on mutual respect and we see that relationship strengthening as the benefits of the FPA’s strategy become apparent”.

Rodney Lavin, FPA Chapter Chair in Gippsland and the inaugural CFP Professional Ambassador said:

“It is an exciting milestone that is being signalled by the FPA announcements at the recent annual conference on the Gold Coast. Financial Planning has come of age and it is logical that the FPA now must concentrate on becoming a professional association rather than just an industry group.

“Financial planning has been evolving in Australia for over 20 years and it is time that ALL members of the FPA are viewed as Professionals and our membership should be viewed, and behave, as such. To raise the bar on eligibility of membership is a good thing for our profession and I endorse it whole heartedly. I applaud the FPA board on their strategy and I am confident we are heading in the right direction.”

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An Articulation Agreement between the Mentor Education Group (Mentor) and the University of New England (UNE) means Mentor graduates can now receive advanced standing if they apply for a Bachelor of Financial Services from UNE.

“Higher education is becoming clearly recognised as a requirement of providing professional financial advice,” UNE School of Business Economics and Public Policy Associate Professor Martin Hovey says. “We are looking forward to offering Mentor students recognition of their earlier work when pursuing our Bachelor of Financial Services qualification.”

The Articulation Agreement significantly streamlines UNE’s financial services degree for Mentor graduates.

Graduates of Mentor’s Diploma of Financial Services (Financial Planning) will receive an advanced standing of 48 credit points. This represents 33% of UNE’s course requirement for the Bachelor of Financial Services degree, equating to a 12-month reduction in the length of the course.

Graduates of Mentor’s Advanced Diploma of Financial Services (Financial Planning) will receive a 60 credit point advanced standing, representing 42% of UNE’s course requirement.

“The value of Mentor’s Diploma and Advanced Diploma is well-known in the financial services industry,” Mentor’s Managing Director Dr Mark Sinclair says. “But the articulation to the Degree of Financial Services is validation of the high calibre of our courses.”

In April this year, the government announced the Future of Financial Advice Reforms outlining the importance of increased professionalism in the financial planning industry through education.

It is expected the accreditation opportunity will be welcomed by financial advisers keen to pre-empt the legislation and the demands of their professional associations to upgrade their qualifications to a degree.

“In the environment of change which is facing our profession, this is very good news for advisers and our students,” says FPA Life Member, a founder of Godfrey Pembroke and Chairman of the Mentor Education
Group Advisory Board, John Godfrey. “The flexibility offered by external study will be attractive to advisers working in an ever-changing regulatory environment.”

For more information regarding the Bachelor of Financial Services visit www.une.edu.au/finserv

For more information regarding the Diploma or Advanced Diploma visit www.rg146.edu.au or www.mentoreducation.com.au

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Well no shortage of activity in the industry  this month with the announcement of the restructure of the FPA to represent individual practioners only.This certainly changes the dynamics within the various associations and to my mind is a courageous decision which clears up and real or perceived conflicts with the FSC. Due to the nature of our business we are members of no fewer than 6 financial services associations spanning the full breath and width of client requirements. Part of my mission is to improve the dialogue between them in understanding that no one fee model is appropriate for the entire market and prescriptive rules have some very nasty side effects.

To my  mind it should be easy enough for all market participants to engage in the same clearly stated principle based guidelines to ensure a largely disengaged public have access to affordable financial planning advice whether on a ongoing or one off bases. Students of business history would be well aware of the long term effects on an industry where it has been distorted and manipulated by external forces to achieve political objectives. Sadly an industry that had traditionally operated with competitive tension through a largely horizontally integrated structure where fund managers competed to get onto administration platform who then competed with advisors for business has effectively ceased to function.

In its place is a new vertically integrated structure where banks and industry funds control all levels of the distribution chain and can freely transfer price internally without showing any external volume based payments. The natural effect being the squeezing out of smaller investment managers and dealer groups who are being regulated out of existence. Individual advisors are now concentrating on the Self Managed Super Fund market increasingly using ETF’s ,Direct Shares and Term Deposits to replace traditional managed funds. In effect servicing a much smaller client base with significantly increased fees the exact opposite of stated Government objectives. The free market certainly has its faults but it still remains the best system we have.

Finally some sad news with the sudden passing of my friend and fellow career financial advisor Vaughan Mackeller.Vaughan was well known to many of you and to celebrate his life we are holding a memorial service at St Matts Manly at 2.30 on Wednesday the 22nd December followed by a Wake.It promises to be a packed house which you all invited to give him a good send off.Vaughan would have liked that.Drop me a line if you are coming.

Till next time

Tony

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The FPA previewed its new advertising campaign to conference delegates on the Gold Coast last week. Its focus is on the professionalism of its members. It comes mere weeks after the AFA’s own advertising initiative was launched at its conference also on the Gold Coast. Its message focuses on the need to plan. Both associations have recognised the need for the public to be made aware of professional financial planners and financial planning. They both see a need for the public to recognise their own members are operating under strict ethics and standards – as opposed to financial planners not members of the associations.

Selling the value of advice is almost 20 years in the making, with promises from the FPA of promoting the brand to consumers emanating from its very first conferences. And it follows the cringe-worthy Dazza campaign of some years ago. Its current idea is to promote planning so that at a local barbecue, a FPA member can talk with pride about his profession among his mates.

The FPA stated its mission is to focus “on the things that will elevate our industry to a universally respected profession”. “Financial planning is a young profession, still in its infancy. We may feel a tad envious of the respect that some other professions command, but they’ve been at it for a lot longer – the medical profession first pledged the Hippocratic Oath 2500 years ago.” (from the FPA’s new brand marketing document). Again, the association compares itself with doctors. Is it perhaps a tad arrogant, and certainly not doing itself any favours by perpetuating the comparison? Despite this, the aim of the FPA becoming an association of which its members “adhere to the highest standards of professionalism, inspiring trust and confidence in the community” is certainly achievable, admirable and aspirational.

The FPA has priced its advertising offering on behalf of planners at $220 a year from each member (or $20 a month). The AFA has asked its members for voluntary donations to its “Make a Plan” campaign. It is estimated to be looking at raising over $2.5 million, with firms contributing what they can and some pitching in up to $10,000. While the AFA is looking at a $2.5 million ad spend, the FPA has a large war-chest of its own and is going to claim an additional $1.76 million from its members each year of the 5-year campaign – so its spend can be much larger.

Running dual advertising campaigns will confuse the consumer in an already acknowledged over-complicated industry.

Perhaps to really promote financial planning in the community some more co-operation is needed.  The associations need to agree ethics, educational standards and promote professionalism in tandem.

It is, after all, a single profession no matter which industry Association one supports. Many financial planners are members of both associations from which they derive different value. How can we expect to capture the public with fractured industry campaigns? The industry funds were able to successfully express their message because they were united. At this time, surely we can all see the benefits of a united front?

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If the proposals get up then from July 2013 new members will only be accepted if they have an approved degree or higher qualification. The proposals also look to establish a ‘professional year’ program of supervision and as one who proposed this in 1997 – during my work on the then FPA’s ‘Towards Professionalism Taskforce’ – I’m glad it’s finally being recommended to members.

The other perhaps more controversial proposal is to discontinue to the ‘Principal Member’ category which will more fully align the association as a practitioner focused. This is not semantics – a key weakness of FPA since its 1992 birth has been the perception that outwardly FPA is all about professional standards but inwardly it’s all about what’s best for members and licensees’ commercial interest.  For many perception is reality and when the media force feeds such perceptions to the community it’s not rocket science to work out what the community will think of financial planners generally and the association.

The ultimate destination for FPA is to become a standards setting body – not a hybrid of member services and professional standards setter. A pure standards setter will implement and monitor professional standards expected of members who are granted the right to use professional designations such as CFP.  Practitioners who breach such standards are dealt with by various disciplinary procedures including, ultimately, dismissal, and the integrity of the organisation and the standards it represents are much better protected.

As for an abolition of the Principal Member category, such former FPA members would still be able to insist that their advisers comply with FPA professional standards and in terms of the ‘member services’ issue for such businesses, for the big end of town their natural home is probably more closely linked to the Financial Services Council (formerly IFSA).  It’s the so-called ‘small’ Principal Members which might suffer most but I have great confidence that the entrepreneurial spirit embedded in such businesses will see opportunities to not only perhaps gather under another purely member services ‘association’ type structure but also to find ways to refresh their commitment to the highest professional standards.

The proposed changes are a good start and in time should arrest the lamentable slide in the otherwise good name of the association in the industry.

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Minister Shorten commented on the announcement:

“I wish the FPA all the best with their conference and welcome the launch of your new strategy to position financial planners as trusted professionals. This will be an important element in encouraging more Australians to seek financial advice which is a key objective of the Government’s Future of Financial Advice reforms.”

FPA CEO Mark Rantall welcomed the Minister’s comments.

“On behalf of the FPA Board and executive team I look forward to working closely with Government to ensure that the comprehensive measures announced today help drive ever higher professional outcomes for the benefit of FPA members and all Australians.

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