Aligned vs non-aligned: We’re all the same

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Financial planning is fast becoming a recognised profession, and the enshrinement of the terms financial planner and adviser are one of the vital steps.

According to Ipac WA CEO Patrick Canion, “It’s one of those steps that might seem quite insignificant, but will prove to be the acorn that grew into the oak tree.” However, Canion says that the enshrinement is still to be passed by Senate, and is excited for this step.

Canion moved to Australia from Texas at the age of ten, and the hint of a southern twang is still noticeable in his voice. He started in the life industry for National Mutual at age 19 and had two weeks to learn the ropes before he was thrown on the line to take incoming calls.

They became part of the company that turned into Ipac in 1997. Canion was a CFP but says he thought ‘I want to advise business owners and I want to advise professionals but why would they listen to me if they’re better qualified than I am’? So he got his Masters and now specialises in clients who are business owners, and says he “helps to make peoples’ dreams come true”.

Canion says the enshrinement of the term shows that "the Parliament of Australia has said this is an important role in the lives of all Australians and it's importnat enough to be defined by law". He says that it will raise the requirements of all advisers, regardless of who they work for, and says to the community that financial planning is no longer a 'nice-to-have' or 'luxury' item.

The next important step for Canion is to have peer accountability. Just as lawyers, accountants and doctors are accountable to their peers for their conduct, he believes that being part of a professional association will ensure greater accountability in the advice profession.

“The regulator’s under resourced… clients don’t always recognise poor advice when they see it, but an adviser knows.”

The thing Canion says he doesn't like is "how so many financial planners want to drag down other financial planners, or criticise or bag them.”

Canion says that an individual planner of an industry super fund or bank is able fulfil commercial obligations of their employer without compromising the best interests of the client. He says planners need to learn to separate an individual planner’s professional integrity and accountability from the potential commercial conflicts that a shareholder in that business might have.

“Industry super funds almost without exception have the highest proportion of Certified Financial Planners amongst their ranks. They might have a limited approved product list but to bag the industry super funds because they’re industry super funds and to bag the planners that are employed by them, is the height of arrogance to my mind.”

  • Peter O'Toole on 27/06/2013 12:54:11 PM

    Alleycat - we can go on forever on this to no real benefit but to answer your specific question re fees , there are a number of fee models & none of them are illegitimate. All might be able to be misused by a malevolent planner. I guess that is the main point - individual planners should act professionally & bad behaviour should be seen as that. However I tend not to favour hourly fees but others may. It is best that more than one fee model is available. The market place will ultimately sort out which one or ones prevail. As for being owned by some financial institution slavery has been abolished for some time & I along with many others operate our own practice but choose to buy licensee services rather than build them myself. All of us are going to make product choices when it comes to which products we recommend. Those, to use your term, not aligned in any way to a financial institution will still, subject to appropriateness, decide which products they will use regularly for many clients. The comment regarding how BDM’s may be paid is irrelevant as they are not the planner. Planners have the professional obligation to the client & are not merely the tools of BDM’s. This is my final contribution to comments regarding Patrick’s interview.

  • Patrick Canion on 27/06/2013 10:33:38 AM

    Hi Alleycat
    Everyone has conflicts, that wasn't my point. Everyone also will have their own commercial agenda, that's obvious as we all have our own value proposition and most financial planners pursue this calling as their vocation.
    All of these legal pursuits can be managed in a way that does not necessarily compromise the quality of advice to the individual client as they present themselves.
    You as an individual may not agree nor like this, but it does not give one a platform to denigrate the individual professionalism of the practitioner. You might think your business model is better but the market will rule on that soon enough.
    And, to clarify, ipac WA is not wholly owned by a major organisation as can be seen in our FSG. This does present conflicts which we manage in a variety of means. Both I and the organisation have learnt that if you completely delight your clients with quality advice and service that is in their best interests, you can also provide your shareholders with a good return on their equity investment.

  • alleycat on 27/06/2013 10:11:34 AM

    Dear Mr Canion,
    I refer to your comment about "the meeting" being widely reported on another website.
    Well that assumes everyone you and I know in the FPA saw or knew about it.
    Unfortunately that wasn't the case, so my point was valid.
    As far as the ads stopping you may be correct but the damage has been done.

    You're correct, we should all stand united but it's difficult to do that when others have their own agenda.
    It's an old chessnut of mine, but can you, Mr O'Toole or anybody for that matter tell me what the right "fee for service" is?
    Is it $100, $200, $300 per hour ?
    Does someone with 2 university degrees charge twice as much as someone with one or none?
    Is the advice twice as good?
    How does a client verify billable hours?
    If you and others think commissions are conflicted and I'm saying they are or they aren't, then I see so many flaws in the fee for service propaganda, promoted under the guise of professionalism.
    If you don't feel that working under an AFSL that's owned by a Bank, Insurance Company or a Fund Manager is conflicted, then how do you explain in a recent survey where many BDM's openly admitted that their bonuses/jobs depended on them promoting inhouse products to their AR's.

    If you are seriously fair dinkum about us all being united you can't take that stance when your position may or may not be conflicted if you're owned by a major organisation.

  • Patrick Canion on 26/06/2013 3:38:00 PM

    Thanks everybody for your comments. Alleycat I would simply comment that those industry super funds ads have stopped last I checked, and that meeting you refer to was reported publicly on another website from memory so there isn't any opacity involved.
    In my interview, I simply was expressing the view that publicly questioning the integrity and/or professionalism of an adviser simply because of their employer or their business model does no one, least of all the critic, any credit. My hope was that we could mature and refrain from this behaviour, because it does nothing to advance our cause in the eyes of the public. It is a hope which makes some of the comments here very ironic.
    An improvement on our current system, in my view, would include a level of peer accountability for ethical behaviour for anyone who sought to practice as a professional financial planner. This would close the potential conflict that can exist between client interest and commercial interest in conjunction with legislation.

  • Peter O'Toole on 26/06/2013 2:17:23 PM

    Alleycat - I fully agree that you can't outlaw "crooked or poor behaviour" but that doesn't mean changes can't be made to limit the risks in that regard. As you indicate change is an inexact process once lawmakers get involved & a pretty constant one. The excesses of FSR were incredible but have since been significantly ameliorated. You seem to have a blind eye to the fact that not all of the bad behaviour occurs amongst what you seem to call bank owned AFSL planners. Whilst I have not seen empirical analysis I suspect the incidence of poor behaviour is probably about the same in both. Whilst I too took great umbrage at the industry fund marketing campaign based on denigration of all planners, they employ planners most of whom I am sure do good work for their clients. I see no reason why they should not be treated professionally in the same way as those in other licensees. New laws will in any case require everyone to do so. FPA members have been required to do so for some time. Industry professional bodies should be in communication with industry funds as with other groups. The fact of such meetings as those you refer to may take place doesn’t mean they will always agree, or they are biased in their favour or that there is something insidious occurring. This debate seems in some way to be too linked to a somewhat narrow view that only small licensees are legitimate planners acting in the client interest. Only anecdotal evidence ever seems to be offered to support that view. This is not a negative comment regarding small licensees, just that there has been & will be good & bad in both large & small. As I said in earlier feedback the strategic advice is probably very similar in most cases but more than one product solution could be “right”. Professionals should not denigrate those in groupings other than their own. Denigrate bad behaviour yes, but not the whole category.

  • alleycat on 26/06/2013 1:44:09 PM

    Dear Peter & Dacian,
    Given our points of difference, here's my problem with your view.
    Ever since FSR in 2000, we have seen a number of legislative changes to the financial services industry/profession and yet we still have people being caught out, acting improperly.
    Some of those have come from more than one Bank owned AFSL.
    It would seem though that none of you see the relationship between the owner of the AFSL and the manufacture of products on the APL used by their AR's as conflicted, why?
    Why does anyone think that legislation will prevent crooked or poor behaviour, beats the hell out of me.
    Until we find the perfect human being this will be a continuing problem.

    Dacian, you would aware of the continuing barrage of industry fund bashing of financial planners on television and other media.

    What would you say if you knew that senior current and past officials of the FPA were guests along with David Whitely (a constant critic of financial planners), all attended an Industry Fund symposium in February this year in Melbourne?
    I have a view on this, but I'm sure many members of the FPA are unaware that this took place.
    There are obviously some good intentioned people in the FPA but it boils down to not only looking after the public interest but the interests of what's fair to all.

  • Dacian Moses on 26/06/2013 12:45:21 PM

    Allycat, the FPA is not an industry body that exists for the promotion of practitioner interests. The FPA is a professional association that exists for the promotion of the public interest. Your point about successful lobbying is well made, but given the philosophical differences between the various groups it was not achieved. Ironically perhaps, I would suggest that Patrick's original article was about advisers banding together rather than seeking division based on ideology.

  • Peter O'Toole on 26/06/2013 12:25:41 PM

    Alleycat - Perception is obviously in the eye of the beholder but external perceptions are not always aligned to reality. I accept that what you say is your view but respectfully disagree.

  • alleycat on 26/06/2013 12:17:57 PM

    Dear Peter,
    I'm not saying you didn't lobby but was it effective?
    You all did it "one out" which was my point.
    Which made it easy for the government to follow the Napoleon principle... Divide an conquer"
    Look what happened with the Banks when the RBA dropped interest rates. Did the banks capitulate and drop their rates or bow to public pressure or did they band together and fight this Labour government
    It's a rhetorical question.
    Look what happened when the government wanted to control the media and institute new laws.
    Did they go "one out" or did they band together?
    Another rhetorical question.
    I did not see any of that from any of the professional bodies combining and representing their members.
    We do not live in communist Russia but it seems like there are some who act as though we do.
    That was one of my less subtle points

  • Peter O'Toole on 26/06/2013 11:33:21 AM

    Alleycat - In a speech at the FPA Convention in 2009 I made the point that whilst supporting a fee basis the only thing that commission based planners were generally guilty of was using the traditional remuneration model. So I agree with your implied view that being paid by commission did not of itself mean that advice was bad. However it seems to me that the commission model has made it easier for malevolent advisers in both the so called aligned & nonaligned models to achieve good financial outcomes for themselves rather than for their clients. The CBA case being one example. In any case, the new laws are about to commence so I guess it the commission discussion is now a moot point. In my view your comment that in some way all of the various industry groups uniting (which it appeared they were on many FoFA issues)would have forced the Government to substantially change the laws they were proposing is unrealistic if not unreasonable & assumes (incorrectly in my view) that intense lobbying did not take place.

  • alleycat on 26/06/2013 10:20:06 AM

    Mr Canion, first off I am an adviser of long standing with an education and worked hard to get my CFP several years ago.
    When you promote the concept that we should stand united there are a number of issues that will never be resolved.
    As Fedup and others have stated, it's the Industry Funds and the incompetent Federal Labour government who have sought to denigrate advisers other than their own.
    It's the sanctimonious who consider charging commissions as conflicted but working for an AFSL with more than 50.0% of it's APL manufactured by it's parent owner is not?
    Fees for service are equally conflicted for a number of reasons.
    Here's my point, had the majority of AFSL's the FPA and the AFA collectively stood up to the government, most of the changes now being imposed on all would have been easily solved by putting in a scale of fees for each service provided to the consumer.
    How that was paid for would have been irrelevant, and the only thing that distinguished one adviser from another was the quality of the advice.
    Somehow that might have incorporated a best interest test for clients.
    I for one cannot understand why that last point needs to be indoctrinated into an adviser's processes, when it should be the first and last thing advisers should consider.

  • Matthew Ross on 26/06/2013 9:56:12 AM

    Spot on Jason.

    I think all of us at some point have experienced a moment or two (minimum) of embarrassment when you see articles about financial planners (like the recent CBA articles) who give us all a bad name.

    As a group, "financial planners" have a dirty name out there in the community. Not sure where the value is in accepting or remaining ignorant to this. Things have to change...

  • Jason Bragger on 26/06/2013 9:47:09 AM

    It is pretty hard to argue that an aligned adviser does not have a conflict that they need to manage. CFPs in major banks still attend "Sales and service" meetings on a Monday mornings. These meetings are not about how to provide better advice to existing clients. The question is can one be a true professional and simply manage their conflicts or should they be trying to avoid them all together.....?

  • Peter O'Toole on 25/06/2013 2:16:58 PM

    Patrick raises some very good points - which I agree with. A good adviser acting in the clients best interest should not be denigrated merely because of the system within which they work. Separating strategic advice from the product advice would seem to be a good place to start. The strategic advice will be valid virtually regardless of which product is used. Advice in regard to products will normally have more than one right answer .

  • Matthew Ross on 25/06/2013 12:35:54 PM

    The height of arrogance in my opinion is an adviser not listening to the needs of a client and devising a way to push clients into various products because their salary and bonus depend upon it.

    This model has been in force in the industry for decades now and still exists today. Anyone bagging out an adviser that operates in this manner is doing the profession a favor.

    We're in the middle of an exciting revolution as a division is formed between the "profession" and the "industry".

    Clients/consumers are seeking advice that is independent of product and working with advisers whose advice isn't limited to a set number of issues.

  • David M on 25/06/2013 10:47:31 AM

    Patrick's right. We should hold each other accountable.. I mean I couldn't count how many clients have come to me with no service from their adviser and paying those high fees in those RSP plans.. hmm I wonder which company that was?

  • Phil on 25/06/2013 10:43:51 AM

    A CEO of a wholly owned subsidiary of AMP is saying that industry fund/bank advisers totally ignore all the commercial pressures that are placed on them and only work in the clients best interest. Recommendations based on a limited APL (due to commercial reasons alone) does not in my mind constitute as best interest.

  • Andrew on 25/06/2013 10:43:30 AM

    Well said Patrick; FPA can't sell the benefits of an educated advisor then call disparage them simply because of who they work for. Consider where that would that end?
    There is an old argument that it's the firm (i.e. afs licensee) that is what should be promoted but as we all know, that has been discontinued by the FPA in favour of promotion of the CFP educational qualification.
    It remains to be seen whether a licensee , such as an industry fund or a bank or insurance company can gain a reputation as a stand-out provider of advice and consequently dominate our small market place.

  • Pat on 25/06/2013 10:36:09 AM

    So, I assume that, as far as an industry fund "planner" is concerned, the best interests of every client will be to solely use an industry fund?

  • Wally on 25/06/2013 10:26:52 AM

    In agree 100% with fedup. The industry funds tried to destoy the planning industry and then when they realised the demand was there for advice tried to join it. The damage has now been done and it will take years to rebuild confidence again. It is happening and all the ovedone legislation won't slow it down, but we'd be a lot further ahead if that portion of the indusrty hadn't tried the division strategy like their allies in Canberra have done. Being a CFP is a good step for industry fund planners, but they're like carpenters only making skirting boards. They'll never get broad experience like an independent or retail planners outside the bank branch network.
    I do agree with Mr Canion, that we need to stop bagging each other. A united industry is a lot stronger than what we have now.

  • Dacian Moses on 25/06/2013 10:08:54 AM

    But we ARE different. If we are not different then consumers do not need to make choices. Emphasising those differences without resorting to ad-hominem attacks is called competition. I would also point out that the law REQUIRES a planner to prioritise the interests of the client over and above the commercial imperative of the employer. This is not optional.

  • Fedup on 25/06/2013 9:47:34 AM

    That is a great comment. However, it is not the retail financial planners,spending their clients money, advertising that financial planners are not worth paying. they have done the old trick of reducing the standing of the entire profession, including them selves.

  • David M on 26/06/2013 10:51:35 AM

    I have to say that the biggest joke of all is the enshrinement of the term financial planner.. I just don't see evidence of people misusing the term.. ok a couple of shonks maybe..but they are breaking bigger laws than this one at the same time..the reality is most of the shonks are allowed to use this term.. I can't wait! Wow everything will be so much better..

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