‘Imperative’ that advice is represented properly through FSC

On Tuesday, the Financial Services Council (FSC) announced the addition of four new members to its board – two from the funds management sector and two from financial advice.

Keith Cullen, managing director of WT Financial Group, and Neil Younger, managing director and group chief executive officer of Fortnum Financial Group, fill the latter category, while Count, Infocus, Otivo, and Rhombus Advisory also joined the FSC’s membership.

“The financial services industry is at its strongest when it speaks with a unified voice on regulatory and policy issues that impact the sector and its consumers,” said FSC CEO Blake Briggs on Tuesday.

“The FSC has a leading role unifying the industry on reform initiatives, and I am pleased to have this opportunity to appoint directors from the financial advice sector to deepen our engagement and strengthen our advocacy on advice issues.”

Speaking to ifa following his appointment to the FSC board, Cullen said it is important that the advice profession has “strong licensees that will represent the interests of advisers with government”.

“We’ve been advocating a lot for the last couple of years, both directly and through the Licensee Leadership Forum (LLF),” he said.

“We felt that the FSC is really the pre-eminent financial services group in the country and as long as we could get the right level of representation, and we’re all convinced that the FSC more broadly was going to take the contribution of advice networks seriously, it was an appropriate thing to do.”

Younger added that taking the position on the board was “critical”, arguing that it is beneficial for both advice and the FSC.

“I see the job as not just an opportunity, but a responsibility as far as advocating for advice,” Younger told ifa.

“[The LLF is] a group of CEOs of commercial businesses, and we’re doing the other work as because it’s very important work, but not in a formal association sense,” he added.

“We looked at how we could work more closely with industry through some of those other vehicles and the FSC made a lot of sense around thinking alignment they want to do some work with. From there we agreed to join the advice board subcommittee and then an offer was made to both Keith and myself to sit on the main board at the FSC, which I think is fantastic.

“From the FSC’s perspective, it does signal the broad focus that the FSC has on its interaction with government and that advice is a critical component of that. So, to have now WT and certainly Fortnum at that table, I think is a good endorsement of advice needing a strong voice, and at the board of the FSC, I think that’s a critical piece.”

Cullen agreed, explaining that having advice networks involved with the FSC gives product manufacturers that are “otherwise represented at the FSC a better understanding of what happens when the rubber meets the road”.

“When the FSC is interfacing with government over changes to things like superannuation or how advice fees might be deducted from superannuation products and so on, which is the critical issue at the moment, it’s imperative that your advice networks are represented properly in that discussion,” he said.

“It was a good offer of theirs to come to us and want us to join and I’m glad that so many of the key players have accepted it and then I’m happy to have been appointed to the board as well because we’ve been advocating for advisers for a long time now and to be doing it through a vehicle like the FSC is very positive.”

Adviser concerns

Many within the financial advice profession, such as those in the comments of ifa, reacted with less excitement over the FSC’s move to “deepen its engagement with the sector”, as it puts it on Tuesday.

However, both Cullen and Younger argued that while the concerns may have been justified previously, bringing more advice networks into the fold showed that the FSC is serious about tackling advice-related issues.

“I think if you look at the history of the FSC, then their impressions certainly may have been fair, in terms of the way that the FSC operated historically,” Younger said.

“My observation, and I’ve worked for those vertically integrated businesses not so long back and I sat on the FSC advice board when I was working for some of the banks, and the level of attention to the advice segment that I’m observing that the FSC has today, versus the fledgling days that I was involved in, is significantly higher.”

Cullen added he understands that a lot of advisers have had a “somewhat negative view” of the FSC, noting that it is a “very different organisation” than in the past.

“If you look at the construction of the board and the people on the board, the vast majority of them are not vertically integrated models. They are just product providers, and you can’t separate advice and product in Australia, the two are inexorably linked,” he explained.

“I think it’s most appropriate for people from both sides of that equation to be sitting around the table together.”

He also argued that improving the advice focus of the organisation would improve the outcomes for advisers stemming from the FSC’s advocacy work.

“If you’re not happy with the way that the FSC has advocated on issues impacting advisers in the past, surely you would rather a seat at the table?” Cullen said.

“Maybe you might have been happier in the past if some leading advice networks had had a seat at the table, because maybe the FSC would have taken into consideration a broader view.

“It’s not lost on anyone that a lot of advisers were very disappointed at the FSC’s position post the royal commission on grandfathered commissions, for example. A lot of advisers were very disappointed with the FSC’s position during the Trowbridge review and subsequent LIF reforms.

“If some strong non-aligned advice practices had a seat at the table during those discussions that led to those policy decisions, perhaps the outcomes would have been different. You’re in a lot better position to influence the debate if you’re in the tent than if you’re out of the tent.”

Advice is a “critical component” of the FSC’s interaction with policy, Younger added, particularly as the number of advisers has declined so quickly in recent years.

“I think the reality is that those policy settings for meeting the demands for advice in the future are critical, and I think organisations like the FSC recognise that and see that as a critical pathway,” Younger said.