Home' Charter : 1111 Charter Contents 40 Charter I November 2011
Opinion > Financial ser vices
Public relations consultants, sometimes
pejoratively referred to as spin-doctors,
often tell their clients about the political
effectiveness of repeating a simple message.
In recent times, we’ve seen the success of this
strategy with the proposed carbon tax being
described as ‘a big new tax on everything’.
Supporters of the carbon tax cry foul,
claiming that it’s not a tax at all. They say
it’s only a levy on polluters accompanied by
compensating handouts should members
of the community suffer as a result of price
increases. The supporters’ argument, albeit
somewhat confusing and unquantiﬁed,
doesn’t seem to cut through because the
critics’ message is so compellingly simple.
It’s as though the simple message is the only
one that people want to hear.
So what’s all this got to do with ﬁnancial
planning? I’m certainly not using Charter to
argue the merits of a carbon tax, but there
is an important lesson to be learned by
ﬁnancial planning reformers from observing
the actions of politicians and their spin-
doctors. The lesson is to stay on message
and to repeat the message persistently. It’s
the only way to cut through the cacophony
of complexity, controversy, diversions, scare
tactics, obfuscations and Armageddon
scenarios that some of the ﬁnancial planning
industry’s leaders are adept at trotting out
against genuine reform.
Regular readers of this column will
know that I do go on (and on) about the
importance of ethics in ﬁnancial planning,
and especially about the need for genuine
remuneration reform (as proposed by the
APESB in APES230). I apologise to those
readers who ﬁnd this tiresome, but the
repetition does work.
There is no such thing as 'optional ethics'
for Chartered Accountants.
Robert MC Brown FCA
Of course, I’m not claiming that the battle
is over yet, or that this writer has been a
lone voice crying in the wilderness. Far
from it. However, what I have noticed is as
the debate has progressed more people
have been willing to accept that genuine
reform (including the removal of percentage-
based asset fees and commissions on life
insurance) is inevitable.
Take the begrudging words of one
trenchant critic of reform who recently said
(while not giving up a centimetre of ground):
“Well, it looks like it’s going to happen, so
let’s just get on with it, so long as there are
some reasonable transition provisions.”
Some critics have gone so far as to
concede that genuine reform must happen if
only to get the industry’s detractors off their
backs. Others (in surprisingly inﬂuential places
in the industry) have actually gone so far as
to accept the ethical principle that ﬁnancial
planners must act without remuneration
conﬂicts if they are to be trusted by the
community to act in the public interest.
The latter is an important development
because it eliminates the hitherto pervasive
argument that there’s nothing amiss with
the industry’s fundamental structure and
that all will be well if the regulator removes
the bad apples from the barrel; or to put
the same argument another way, most
ﬁnancial planners deserve to be treated
as professionals while receiving conﬂicted
remuneration, such as percentage-based
asset fees and commissions on life insurance,
provided they fully disclose their conﬂicts.
In the case of accountants, this specious
argument has been implicitly accompanied
by the special pleading that practising
accountants who offer ﬁnancial planning
services should receive an exemption
from the application of our code of ethics
(APES110) on the basis that ﬁnancial
planning is somehow different and that our
members who are engaged in it should not
have the usual ethical rules applied to them.
The argument continues that it is unfair
for ﬁnancial planners who are accountants
to be required to comply with our code (and
APES230) when non-accountant ﬁnancial
planners are not required to do so. This is
the commercial level playing ﬁeld argument.
The problem with it is that membership of a
true professional body (such as the Institute
of Chartered Accountants in Australia)
is properly accompanied by mandatory
compliance with the highest professional and
ethical standards from which there can be no
exemptions or carve-outs.
In other words, being a Chartered
Accountant does not involve ‘optional ethics’
designed to suit particular commercial
circumstances. And in any event, most
members know that the substantial
professional advantage of our designation
(trust) more than compensates them for any
perceived commercial disadvantage arising
from lower ethical standards allowed across
much of the ﬁnancial planning industry.
In her August 2011 Charter column, our
president, Rachel Grimes FCA, wrote: “Ethics
is a founding attribute of our designation...
ethics is the currency of our market,
underpinned by the principles of integrity,
objectivity, professional competence,
due care, conﬁdentiality and professional
behaviour” (as outlined in APES110). That’s
exactly why we cannot take a backward
step when it comes to the ethics of ﬁnancial
planning. It’s why increasing numbers
of members (and non-members alike)
understand that APES230 must be adopted
‘without fear or favour’.
Robert MC Brown FCA is a ﬁnancial planning
There is an important lesson to be learned by
financial planning reformers from observing the
actions of politicians and their spin-doctors
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