Financial adviser coach Tony Vidler explains how advisers can help to implement the right kind of regulatory reform:
For all the distractions, downtime and inefficiency introduced with new financial services regulation it is very easy to conclude that regulatory reform is a whopping big breath of meaningless hot air. The vast majority of advisers conclude that it is simply an impost which in itself creates little to no value.
I would be the first to agree that the implementation of a lot of regulatory reform is downright ugly, unduly bureaucratic and further confused by the sudden feeding frenzy of new consultants and gurus who have just the solution for you! A new piece of reform comes into play, and while the advisory firms are working out how to implement and make it work, the vested interests are swiftly pronouncing and highlighting the additional risks and costs of the reform – which fortunately they just happen to have an answer to...at a modest cost.
Anyone in any business has to take much of that type of hype with a degree of cynicism and determine for their own business precisely what the changes mean, and what the risks are. Don't take somebody else's word for it without applying some mental energy of your own.
If we think about it logically it is difficult to argue with the purpose of regulation. In general terms it is intended to raise consumer confidence in the sector. It is to promote transparency and trust. It is intended to raise professional standards to ensure that the practitioners can have confidence in their own profession as much as anybody else can.
Fundamentally the purpose of regulation is to attempt to improve the business environment of a profession through intervention because the sector has been unable to achieve these goals itself.
That might not be how we like to see our own industry, but we have to accept it as a truth: we do not universally enjoy consumer trust and confidence. People are not flocking to use either the financial products or to obtain advice about whether they should use them. Virtually every financial adviser comes across work by other advisers that causes them to shudder: issues abound still with a proportion of the industry's behaviour, ethics, or technical competency.
This is why I believe regulation is necessary and warranted. Professionals want the same outcomes as regulators. We perhaps disagree quite often about the best way to achieve the objectives, but we actually want the same result. If we want the same results but have different perspectives on how best to achieve them, then we are best to communicate and work with regulators. In dialogue and co-operation there are workable solutions to be found.
Speaking personally, I would suggest that it is potentially a red-flag danger-signal for all other professionals when you see a financial adviser adopting a confrontational, aggressive or dismissive approach to regulation. Sure, rules can be limiting and pain in the backside....who doesn't want to drive at 140 km/hour some days on a fine road with great vision ahead? The rules limiting and governing our behaviour are there to ensure a reasonable degree of safety for others, some societal consideration if you like, are built in for all.
That has to be a good thing for the majority. To develop a profession we need to work with regulators, and help shape their thinking on how to implement then objectives that all of us want. That is simply good old fashioned common sense isn't it?