The financial giants attempting to lead the advice debate….again.
On Thursday, 7th February 2017, Scott Morrison, then Federal Treasurer, started question time in our parliament holding a piece of coal aloft.

It was a pre-election stunt to draw attention to his Government’s commitment to Australia’s coal mining sector.

Ironically, now as our Prime Minister, Mr Morrison has changed his message about how an active climate policy with a 2050 net-zero target was dangerous. He is telling a different story now, dispelling any hesitancy to attend and eager to proclaim Australia’s climate commitments at the United Nations Climate Change Conference starting 31st October in Glasgow.

In politics, it is important to be moving with the sentiment.

Or at least to be perceived to be?


After an initial read of the latest white paper on advice from Australia’s Financial Services Council (FSC), I reckon they’ve been taking close note of Mr Morrison’s tactics.

In early 2018, a little over a year after Mr Morrison passed the piece of coal around parliament, Justice Kenneth Hayne started passing the message that “public submissions” were integral to his upcoming Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Many of those public submissions became high-rating theatre.

Hearings exposed attempts by Australia’s most trusted financial institutions to hide details from regulators, influence witnesses, offer products that customers did not need, and charge for services never delivered. The confessions swelled sentiments that sales targets drove the industry rather than serving the greater good of Australians.

Justice Hayne’s summary after the Royal Commission was one word – greed.

He believed the industry’s operational systems, self-interests and systemic behaviours were over-whelming efforts to fulfil a fundamental duty of care to clients.


But according to FSC’s latest white paper on advice, everything has changed.

Thank goodness.

By the way, the FSC represents all of Australia’s major financial institutions whose conduct was centre-stage during the 2018/9 Royal Commission.

Three years on, the FSC seeks to lead the debate to reform financial advice.

The white paper heralds a new era for advice. Fuelled by independent analysis from KPMG, the recommendations aim to ‘give financial advisers and the advice industry a more positive future’.

The metamorphosis is as striking as Mr Morrison’s change on climate policy.

Like a forward-looking politician, the FSC has successfully looked backwards at the old product landscape that used to represent the advice industry and made recommendations for a better future.


The problem is that there isn’t a product-based future in financial advice.

It’s an advice-based future.

The report understands that financial advice and product will eventually be separated, similar to the supply separation of pharmaceutical drugs from medical advice. However, it concludes the most significant issue facing the advice profession is costs.

From a product perspective, their recommendations on reducing costs are correct. Ironically, the excessive and costly compliance frameworks was a regulatory response to address the poor systems, behaviours, and greed of their member firms under their watch.

The fundamental problem with the report is the treatment of financial advice as a product. This is understandable as FSC member firms make money not from the sale of advice but products attached to advice.

Advice is not a product.

People only seek advice when faced with circumstances or complexities that they cannot best resolve themselves. From this perspective, while costs are important, the future of financial advice is more about value.

The past three decades of financial advice has centred on the value of financial products. The future is about advice centred on the value sought by clients, regardless if financial products are required or not.

The report has merit. So too does its bias.

Four of the largest ten Australian companies are financial services groups with deeply vested interests. Fast-evolving technologies such as blockchain will significantly disrupt our future beliefs and habits regarding money. The last eleven years have witnessed seven enquiries into financial services to address imbalances of provided services while serving the greater public good.

The debate regarding the future of advice must be open to all, but needs to be led, not by suppliers like FSC, but by the advisers working to create the most valuable possible future for their clients every day.

Like Mr Morrison’s visit to Glasgow in early November, political grandstanding is predictable, but the ability for political leaders to implement is far less so.

What do you reckon?



Photo Credit: Photo by KM L from Pexels



For over 30 years, Jim has influenced, coached, and consulted advisory firms across Australia. His firm, Certainty Advice Group coaches, trains and is building a growing group of advisory firms delivering comprehensive, unconflicted advice, priced on value. The community of advisory firms aligns with Australia’s highest and only ACCC/IP Australia Certification Mark standard of comprehensive, unconflicted advice – Certainty Advice. He has authored three books regarding financial advisory firms and is due to release his fourth book in Spring this year – What Price Value.

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