Expert Feed
Royal Commission: Mud doesn't always stick

Among the day-to-day public revelations at the Royal Commission, and the obligatory executive departures and corporate restructures, the industry can draw some small comfort that not all mud sticks.

If you cast your mind back to the Royal Commission into Trade Union Governance and Corruption in 2015, there were one or two financial services executives dragged through the mud and they have continued in the industry to lead successful businesses.

Regardless, we cannot underestimate the impact this Royal Commission will have on financial advice in Australia and how hard it will be to restore trust. Over the past fortnight some of the most engaged and active participants in the sector have made comments on social media that resonate loudly.

We reported on an independent financial adviser who, for the first time in his career of more than 25 years, said he was embarrassed to call himself a financial planner.

The co-founder at one of the largest risk profiling firms that assists financial advisers also commented that "it's hard to imagine anyone sensitive to their own best interests using a planner associated with a major Oz bank in light of revelations at the Royal Commission." He went on to say it "raises serious questions of integrity for vertically integrated offerings in other countries."

Before Tuesday there were musings in the industry and around our newsroom that the latest round of the Royal Commission was painting independent financial advisers (IFAs) with a fairly clean brush, or throwing little mud. When the repeated advice failures of the banks and AMP were discussed at length in such a public environment, it was hard not to form this opinion.

The latest data around financial adviser movements is also a good indication of where industry sentiment lies - and it's not with the banks and instos.

Rainmaker research shows advisers are continuing a shift away from bank and institutionally-owned licensees. From a pool of 22,558 advisers, non-aligned licensees saw 877 new advisers added to their collective roster and 656 departed aligned counterparts in the 12 months to December 2017 (see p.23). We haven't even touched on the rise of robo-advisers here.

But again we come back to Tuesday - the day Commissioner Kenneth Hayne turned his inquiry up a notch.

No sooner had the banks and AMP finished their testimony, we learnt the failings of Henderson Maxwell and Dover Financial Advisers and the revelations added to what has been a horror fortnight for the industry.

But only hours after the final witness and closing statements from Senior Counsel Assisting Rowena Orr, several financial advisers have come out on the front foot to fight for what they believe in. In their collective view it's clear that not all mud sticks.

It might be right of Malcolm Turnbull to say that, politically, he would have been better off calling for a Royal Commission several years ago. However the nature of this Royal Commission has clearly shown Australia's financial advice system is well and truly due for an overhaul and it must not be the next political football.

Link to something xl19S3He