One of my favourite stupid sayings goes something along the lines of “…. is the new black” (insert whatever is the trend of the moment. It is ridiculous because you cannot be “new” and considered a classic both at the same time). So i am actually being terribly clever on this lovely Friday, by using my most unfavourite saying as a way of ridiculing the current trend of blaming Advisers for every ill of the world. It seems to be the journalistic thing to do right now. Here is an example…
The Eureka Report is an excellent online publication, headed by the veteran financial journalist Alan Kohler. It provides opinions and information on financial matters, and is targetted at the “do it yourself” investor and market watcher. Here is the title of an article by George Lekakis in the November 3 issue…
“Why is your adviser smiling?” The subtitle is “PORTFOLIO POINT: Millions of dollars in payments to financial planners show the industry’s plan to self-regulate is not working.”
Let’s remember that i am a financial planner with a thin skin, and i tend to take anything written with the word “adviser” in it personally. “Toughen up Princess” i hear you say. Maybe. However, there does come a point at which it doesn’t help to say to yourself “they’re not talking about me”. And the philosopher in me squirms at examples of poor logic, especially when it appears to be a simple case of grandstanding for marketing purposes. If the issue is bias and independence then there is far more relevant material that could have been covered.
Why does the Eureka report need to join the lynch mob? If you read the title of the article then it clearly is suggesting your financial adviser is smiling because they are taking secret commissions and aren’t telling you about it. Except that the article is actually reporting on the inability of financial companies to get their registers of “soft dollar” arrangements into order.
The point being that the writer of the article is blaming financial advisers for the actions of financial services companies, and suggesting that the adviser is happy to take money and not tell anyone. It is suggesting that people who have an adviser are being cheated. It is not only false logic, it is a blatant (at least, you’ve got to hope it hasn’t been done unintentionally) attempt to throw more mud at financial advisers. To clarify this, the bulk of financial advisers in Australia operate through what are known as “dealer groups”. These are the businesses that hold the licence to give planners their authority to operate (such as AMP, MLC and AXA). The individual planner in these businesses could be doing a particularly good job of helping their clients within the limits imposed on them by their dealer group but commentary and announcements such as the Eureka article are pinning the industry faults on that planner. The article is actually suggesting that the reporting of soft dollar (indirect) payments are not being reported properly. That is a valid statement, and if some of the registers are being manipulated or failing through non-disclosure then that is a matter that should be dealt with by the regulator. Why is there a need to denigrate advisers when raising this point? Maybe it’s just easier to do it that way?
I’m not just annoyed at the misuse of the suggestion that planners are crooks. I’m annoyed at the lack of self awareness that is attached to this kind of media material. There has been a proliferation of “do-it-yourself” groups, newsletters, websites and publications in recent years and a lot of these see financial advisers as competition. In other words, there is a vested self-interest in denigrating the efforts of financial planners and advisers. It is, in effect, yet another form of bias and arguably the non-disclosure of a financial interest. Maybe such articles should include a disclosure statement “The writer obtains a financial benefit from people who leave their adviser to operate on a do-it-yourself basis”. Or maybe “hopes to”. I would not hold my breath waiting for that one.
If you want another example, ponder for a moment the ongoing campaign by “Industry Funds” to denigrate financial advisers, with an emphasis on those advisers who receive payment through a commission. The joke of this is that the people running the Industry Funds are using money taken from member fees to fund a national campaign to change the way the entire financial services industry operates. Good thing, you may say. However, wouldn’t it be more in line with the philosophy and logic to NOT spend the money and simply reduce fees to the members of those super funds? After all, those members may have nothing to do with financial advisers or investments generally. Why should they fund such a campaign?
Why should i care what the industry funds do? Why should i care if financial advisers and planners are lampooned in the public sphere? The clients i deal with day to day dismiss such articles and if anything raises a question about their relationship with our business then they simply ask. Why should i care if it doesn’t directly impact on me?
I care because the average person is being treated like an idiot. Toilet wall sound-bites are being used to explain complex issues. Broad talk of morals and ethics and right and wrong are being bandied about as though they are the sole perogative of only small sections of the community. Super fund members are having their money used to fund ideological campaigns and to build the power base of self-interest groups. People are being told that one way of doing things is definitely better than another, when we live in a very chaotic world, where straight lines are the exception rather than the rule. There is usually more than one way to achieve any outcome and it is not always obvious which is the best. I care because i am a financial planner with way too many years experience stacked up in my memory, and it seems to me that an awful lot of hot air is being generated by people who haven’t worked out, or don’t care, what the full ramifications of their actions will be.
Maybe i should change profession? Except i love what i do and, like many financial planners, feel an intense obligation to continue to help the people that come to me for help with their financial world. So for now, i’ll just work on a thicker skin, and use the occasional post such as this to vent my irritation at a those people who claim to know exactly how the world works, and how it should be run.