ASIC should have umpired ‘misleading’ FoFA frenzy: AFA

by |
It was ASIC’s duty to step in and address the misleading information about the FoFA amendments being fed to the Australian public.

This assertion is part of the Association of Financial Adviser’s (AFA) submission to the Financial System Inquiry (FSI), headed by former Commonwealth Bank chief David Murray.

The submission notes that section 1(2)(b) of the ASIC Act includes an objective for the regulator to promote the confident and informed participation of investors and consumers in the financial system.

AFA COO Phil Anderson told Wealth Professional that he wants to see the FSI use the lack of mediation by ASIC as a case study for what could be done better in future.

“We are raising that question because we think that the debate hasn’t been conducted in the most transparent of fashions and it would have been beneficial to have an umpire step in,” he said. “It would have put ASIC in an uncomfortable place, but we believe it’s something that should have been considered to the extent that it’s part of the role of ASIC.”

The Australian public’s negative perception of the financial advice industry has been fuelled further by the “inaccurate reporting” over the past two months in relation to the FoFA amendments, Anderson said.

Another part of the AFA submission addressed a serious concern about the risk of financial advisers flocking to leave over the next five years.

Alongside generally negative public perception about the profession, this risk has been compounded by the amount of recent regulation change, and the high number of baby-boomer generation financial advisers in the industry.

“[As an adviser] as you get older you need to make a decision to ride the regulation wave or consider retirement,” Anderson said. “We’re also concerned the negative media coverage doesn’t paint financial advice as the good profession it should be.”

As it stands only two in ten Australian’s seek financial advice, and now thanks to the FoFA debates the remaining 80% of the public will have a tarnished idea about the profession, he said. A change in this perception, along with better education is the only thing that can solve the financial adviser flight risk.

“People need to appreciate what financial advice is about and what value they get from it – then we can start having this operate as an industry with a greater flow of university graduates.”

SEE MORE:

Explosive allegations: ASIC "tainted by corruption"
ASIC reviews its penalties
AFA makes 22 submissions

  • Adviser B on 7/04/2014 10:05:07 AM

    It was quite hypocritical for much of the mainstream media and well-known financial commentators (with vested interests) to launch attacks against the integrity of the profession, whilst simultaneously either outright lying or at the very least seeking to deceive the public.

    Attacks on a profession may be warranted, but by doing so with so much deceit involved is clearly wrong on so many levels. 'Journalistic integrity' has become an oxymoron, yet whilst they are happy to deceive and act with little integrity, they attack others for similar acts.

    If financial advisers lied, exaggerated, omitted, sought to deceive as much as 'journalists' in the media did, the industry would be shut down.

    At least the finance industry has regulations - the media only has token 'self-regulation' and a toothless body, and is free to abandon any attempts at professional integrity and unashamedly acts as propaganda for their own vested interests. When the previous Government suggested the media should be regulated to ensure that very basic levels of honesty and journalistic integrity were actually upheld, the media launched a massive campaign about 'free speech', defended their right to lie, and suggested that the expectation that the media be honest is the equivalent to regimes under Stalin, Kim Jong-Il, Pol Pot etc.

  • Craig Yates on 7/04/2014 1:06:50 PM

    I entirely agree with Adviser B and the commentary surrounding the skewed and targeted journalism in regard to FOFA.
    I am normally an avid viewer of ABC television and I will say that in regard to the FOFA debate, I have been appalled at the underlying inference and obvious bias in the reporting of at least 2 or 3 high profile evening presenters employed by the ABC.
    Do ABC employees simply forget that they are in fact a public servant and funded by the taxpayer of all political persuasion?
    It is this fact alone that should therefore demand from the ABC unbiased and balanced reporting and analysis of issues without the obvious political agenda that seems prevalent in every report to do with the financial services sector.
    I am certain that as soon as a story regarding our profession is "hot", it is almost an immediate response to paint Financial Planners and Advisers as untrustworthy and overpaid.
    In recent times some of the more prominent ABC journalist's salaries were disclosed and the value for money for the taxpayer must be seriously questioned.
    Of course, the ABC are not on their own regarding the reporting bias that exists, however, as a service that is paid for by us all rather than a publicly listed media business that can obviously skew reporting to increase sales, surely there needs to be accountability for the agenda that is peddled.
    They know well the power they wield and once commentary has been delivered, it becomes almost impossible to rectify the damage done.
    It is so very blatant to see an interview where the line of questioning is very clearly designed to support a very heavy left wing ethos.

  • Adviser B on 8/04/2014 10:01:04 AM

    Craig, I think we are both avoiding mentioning a certain well known identity who has the initials of A.K.

    In defence of the ABC, I have seen both sides of the argument by them (though more towards one side as you suggest).

    The Age has been very biased - some of the articles written by their finance 'experts' were outright wrong and over-the-top sensationalist, without any examination of the other side at all.

    News Ltd publications were also downright wrong and biased, but less prevalent - fortunately they didn't run with the issue too much, as their target market wouldn't understand what was even being discussed because it is not about football or reality tv.

    It does concern me though that the FOFA issue has been dragged into leftist or rightist idealogies, and politics as a whole. It has nothing to do with it really, but now the Finance industry is being tarnished because Sinodinos was a leading figure in the amendments, who now appears as a villian due to his involvement in using over $275,000 of taxpayers money for his own pay and as donations to his own party. It has become easy to then suggest that everything he has touched or worked on is also corrupt, regardless of the work. Ideally, the FOFA amendments should be viewed in their own right and debated, but that will never happen given the sensationalist and less than honest mainstream media we have.

  • SB on 8/04/2014 10:01:44 AM

    Hang on a second....financial planners are untrustworthy and they are overpaid.

    Let me qualify that statement...they don't appear to have the trust of the bulk of Australians (only 20% seek to use them) and when it comes to the provision of investment advice, none appear to be able to add value in excess of their fees.

    These two simple facts permit the "untrustworthy" and "expensive" tags
    to stick. Shooting, gagging or vilifying the messenger is unhelpul to say the least.

  • Adviser B on 8/04/2014 10:28:54 AM

    I will pretend you are not trolling, and consider your 'conclusions':

    First, you assume that trust is based on how much a service is used. I don't go to the gym or the dentist as much as I should, and the same applies to most Australians. Does that mean we therefore don't 'trust' gyms, or dentists.... or pretty much any other service provider? I don't visit my grandma as much as I would like, but it has nothing to do with 'trust'.
    Your 'conclusion' that how much we visit or use something is the key indicator of 'trust' is... breathtakingly laughable.

    Secondly: 'None appear to be able to add value in excess of their fees' - clearly you just made this up. Countless studies and stats PROVE otherwise.

    Shooting, gagging or vilifying the messenger is justified when the messenger lies, deceives, distorts the truth.
    Just as you have done in your comment.

  • James Smith on 8/04/2014 11:00:53 AM

    SB what proportion of the population have regular check ups with their doctor/dentist ?
    Does that proportion have anything to do with the trust they place in either profession ? or is it more a reflection of how much value they put in checking that their teeth/body are well maintained ? It is the same with financial planning. Our job is not to evangelise our services to the 80% Neither is that the role of dentists or doctors. As a society though, we live with the consequences of those 80% who subsequently need gov support with their medical needs and finances because they did not take preventative/planning measures. Sadly the silent voice in this debate are the clients and their trusted advisers. When are we going to wake up to the fact that it is the marketing dollars and political influence of the big institutions to flog their product direct to the public that is the main game here. Sadly we will all bear the cost as we simply cannot afford to financially support the masses throughout their retirement. Wake up SB. Spiralling Health costs and Centrelink Payments are a massive problem for this country. Who is vilifying the messenger ??

  • Craig Yates on 8/04/2014 12:14:43 PM

    SB....What media organisation are you employed with?...great antagonistic commentary by Soap Box (SB) ?
    The unfortunate truth is that the messenger has been so obviously guilty of constantly skewing the message to suit their own agenda.
    More often than not, the so called "message"
    is based around the creation of fear as that creates conversation and hype and builds the reach and profile of the organisation and possibly the journalist. Controversy sells, irrespective of whether the story is incomplete, unbalanced and biased.
    It is a rare thing to see a balanced view and of course even rarer to see a good news story regarding or promoting the incredible work and value that Financial Planners can deliver to people.
    I assume you have heard of the 80/20 rule ?
    The reason why 80% of people may not seek financial advice (according to you), is because of abject apathy or not prioritising their financial needs.
    Because the advice Financial Planners provide is intangible in the sense that you can't often touch, feel and sense an immediate result, some people do not equate the value of the advice, with the potential benefits.
    It is the same reason why so many people do not have a Will. To spend money now with a Solicitor to plan for something that may happen at sometime, somewhere, somehow ??
    The mortality rate is still 100%, so it is a definite, but having people address a matter that is intangible to them is the issue.
    As a result of the relentless negative pursuit of the financial services sector over the last 10 years by the media, it is most unlikely that the public's perception of the value of advice will change anytime soon.
    Financial Planners do not need to waste their time with people who are disinterested, apathetic, disengaged or wish to spend no more than $300 for advice.That is what Industry Super Funds are for.
    We will work with the 20% who wish to take control of their own financial destiny, look after their family's financial well being, engage, trust and value professional advice.
    The unfortunate result of this is a continuing and very costly burden on society for many, many years to come.

  • SB on 8/04/2014 1:25:29 PM

    Sorry. Didn't mean to come across as a "troll" or antagoniser. I genuinely mean well, however I hasten to add I can see in retrospect how my comments might be construed as inflammatory.

    I guess I tried to point out that the commentary is what it is...that is the reality and it is regrettably unfavourable and reflects a lack of trust. The media is less a cheerleader for disparaging financial planners and more a foghorn reflecting the wider view.

    In respect of the 20% who use financial planners...I agree, this is not sufficient on its own as a barometer of overall trust. There are many otjer statistics, studies, surveys etc that reflect a low level of apparent trust. Again, that's the reality. Financial planners, for whatever reason, appear to the general population to be untrustworthy. We can rail against it and say it's just not true but it is what it is.

    In respect of my claim that advisers appear unable to add value (when it comes to investment advice) in excess of their costs, I will stand by the statement. I believe the published evidence is overwhelming and irrefutable. I'm sorry the brevity of this post space prevents me from making that point much clearer.

    And finally, it's not that health costs and Centrelink payments that are a problem, its rather the welfare mentality that pervades the general population. The attitude seems to be "Why bother planning for the future? The government will pay me a pension anyway!" I was at a planning conference the other week and THAT was the attitude of many planners when it came to the importance of addressing sequencing risk. "Why bother managing it? The penison will top it up if the financial plan fails." Extraordinary!

    How can planners expect the population to trust them if they don't even trust themselves?

  • James Smith on 8/04/2014 1:59:37 PM

    SB the 20% that use advisers are the barometer of trust and value. How can someone that does not know me or have had any experience in dealing with me make a claim that I am not trustworthy or don't add value ? And if they do, how is that meaningful to me ? You seem to argue that because research/media report that advisers aren't trustworthy it must be true without reviewing the source. Advice practises are built on the retention of clients and referrals from them that reflect the value that we provide. Fortunately your opinion or the overwhelming and irrefutable evidence that you just didn't have time to explain this time ??? don't really count for much other than to push your own agenda on the 80% who would not know any better.

  • Keith L. on 8/04/2014 2:21:15 PM

    After viewing how badly A Current Affair misrepresented a story I was associated with some years ago, I completely lost faith in the veracity of any item they presented and ceased watching the program.

    On the other hand, I had a high degree of confidence in the accuracy and the analysis of material aired by the ABC. That is, until recent times when I have perceived the adoption of similar biased attitudes to those of commercial stations hungry to improve their ratings through sensationalising promotional material headlines then having to continue the slant during the presentation of the item.

    I have no problem with an investigative journalist using devil's advocate positions to obtain a degree of balance in what may otherwise be a one sided representation but when the questioning becomes hostile, the interviewer is unprepared relative to the subject material and is obviously biased as some of the ABC's interviews have been regarding the FoFA issue then it is time to challenge their motives including their funding arrangements.

    I do hope that SB is not and never becomes a reporter.

  • Funky Goose on 8/04/2014 3:12:51 PM

    SB it is telling that you have twisted the fact that the age pension acts as a safety net during volatile markets to somehow argue that advisers aren't trustworthy ?Managing sequencing risk is a massive issue that retirees face and it is an area that requires personal advice and hand holding that an institutional fund is ill equipped to provide. Does your irrefutable evidence include live cases that incorporate how sequencing risk was managed (or not ) and the extent to which the age pension acted as a safety net. It is noteworthy that the industry super fund ads that show performance over the last 10 years do not include the higher age pension benefits client would have received if they invested part of their funds into asset test exempt annuities.

  • Craig Yates on 8/04/2014 3:24:59 PM

    Absolutely correct Keith L.
    The ABC is a representative of the people and funded by the people, and so therefore should present issues on an unbiased and balanced basis.Too often of late, the interviewer on either ABC television and radio have pursued a biased line of questioning and rudely interjected and interrupted a knowledgeable and well qualified interviewee putting forward an accurate answer that may not be satisfying the agenda that is being pushed.
    I agree that it is time an assessment of the ABC's funding model is scrutinised by Govt, not with a view to funding reduction, but with an analysis of journalistic approach.
    A couple of weeks ago, The CO guys were doing their "analysis" of super funds and toward the conclusion of the segment basically recommended that people should consider an industry super fund !!!
    Unqualified, general advice to their viewers, smacking of bias.
    The ABC is a great institution and should continue to be so as long as they are held strictly to a non political bias.

  • SB on 10/04/2014 12:34:52 PM

    Aah James, you may be the most trustworthy financial planner in all of Christendom, but one swallow doesn't make a summer.

    Besides my observation that planners are "untrustworthy" is not a personal criticism. It is an observation of a general opinion that it appears most ordinary people hold, which was reflected by the ABC and is reflected all the time by other media.

    I think it's fair to say that most people form general opinions. You don't have to wait to experience every used car salesperson in the country before forming an opinion (perhaps) that used car salespeople are untrustworthy.

    In any case, bias in reporting is natural. The ABC should be no less immune to it than our own industry bodies, Licensees and so on who are as guilty as anyone else of (natural) bias.

    And finally...what a nonsense to say that the ABC is representative of or funded "by the people". It is funded by the government who forcibly confiscates money from the people allocating it unilaterally to its favoured cronies. Don't blame ABC reporters...if you are employed by the State, funded by the State or do the work of the State..chances are, you will identify with it's interests.

    And lastly, I'm still LOL that Craig and Keith can't see the irony of their claim that the ABC should not be biased (so long as it concurs with their own bias?) And that Keith says he has "no problem with devils advocate opinions" except when they turn hostile, and then in the same breath he adds a hostile "let's hope SB never becomes a journalist" barb in retort to my own devils advocate position.

  • James Smith on 10/04/2014 1:39:53 PM

    SB my point was not to promote my own trustworthiness rather to say that the assessment of any financial adviser's trustworthiness is in the hands of their clients not someone who has had no contact with them. Like advisers, if ABC or other journalists do not have the backbone to do their own research to develop real insight they are at best devaluing their contribution and at worst mere puppets to the vested interests in their ear. If you are right in your assessment of the ABC journalists isn't it about time that they disclaim at the beginning of each program - The views and questions raised in this program have been prepared by XXX who represents XXX rather than pretending that they are providing researched,insightful commentary.

  • Andrew on 10/04/2014 8:35:59 PM

    SB you say that you dont have to experience every used car sales person to form the general opinion that they are untrustworthy.

    If a journalist hasn't ever spoken to a used car salesperson then they should not promote the general opinion as they actually have no idea and therefore have no opinion or facts to share.

    If a journalist has purchased a used car then the journalist should report their experience whether that supports or contradicts the general opinion. Historically contradicting general opinion does not get much coverage so perhaps I should be talking about reporters here not journalists.

    It is a bit like the difference between investment advisers and financial planners.

  • Innocent Observer on 11/04/2014 10:37:09 AM

    Settle down guys, if SB doesn't trust advisers I'm guessing he's not going to take advice (ergo: take the time to understand a) what financial advisers do, and b) the considerable volume of research quantifying the value of advice….not to mention the qualitative aspects that many clients value).

    So there's a poll that says only 20% use an adviser? Who cares? I reckon only around 1/3 of people who are referred to me meet the profile of someone I will want to (or offer to) work with. That's not being snobbish, but the way, it's me acting in everyone's best interests.

    Firstly, I'm not a charity: if I can show the client how to save say $2k p.a., but in doing so the client is going to absorb 20 hours of my time (and 20 hours worth of business overheads, support staff etc) then the chances are the relationship is not going to work (for at least one of us). As I only take on "clients" that I know I can add real value to, I would not feel comfortable charging this client $2,000…..even though that means by gross hourly (after business overheads) is less than $4 per hour.

    Secondly, different people have very different personalities. Personally I'm an a strategy-focused, details oriented kind of guy. As a result I really enjoy working with engineers or analysts more than school teachers (no offence to any school teachers out there).

    Thirdly, not everyone "needs" advice (particularly ongoing advice). In fact the only people who seem to dispute this are some clients! The average single 25 year old is probably going to be completely fine with a few hundred bucks a year going into his Industry Super fund…. Could we eek out a few dollars here of there for them? Provide a more comprehensive risk management framework? Probably. Is it the most important thing on a 25 year old's mind? I sure as hell hope not.

    But anyway. Back to the original point. I, like most, am a little disappointed that we aren't setting the world on fire as the most "trustworthy" profession. But who is surprised when the most that people know about what we do is a John-Wood voiceover on a swanky Prime-Time television commercial from our buddies at ISA?

    So chin up, guys and girls, and remember: our clients are what is important. So long as we are taking care of them, who cares what the other 80% think?

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions