The fact the financial planning industry is feeling very much under the pump is by no means lost on FPA chief executive Jo-Anne Bloch.
In the past three months alone, confidence in the industry has experienced a downward spiral.
The root cause has been blamed on a mixture of two things: the effects of the global financial crisis finally being felt at a local level and the collapse of a number of financial institutions.
It has also emerged that due to these two key factors, Australian investors are not the sole industry collective that has lost faith in the advice sector.
Many financial advisers are succumbing to the stress and frustration of the times and are not only turning on each other but on their peak association, the FPA.
One adviser suggests the FPA needs to shift its focus within, to put its head down and concentrate on promoting solid education and resources to its members.
Another claims the FPA represents too broad a church within the industry, stating it is time for individual advisers to be separately represented.
"We do have a diverse membership that has a whole raft of perspectives and I can understand that they are feeling very much under the pump, not only as financial planners but because they are so very much part of the global financial crisis," Bloch says.
"And I can understand that their clients are looking to them for solutions. And when they look to them for solutions and at the same time reading about Storm [Financial] there is certainly going to be some uncertainty from a client point of view."
The FPA has been openly criticised for the stances it has taken in 2009.
The criticism stems from the association's inability, some say, in standing firm for its members.
While Bloch has been the voice for FPA members for close to three years, many believe the association has shown little ability in weeding out 'bad apples' as well as an inability to choose the right battles to fight on behalf of its members.
Others feel that the FPA has let down its members in simpler ways; mainly on the part of offering support and advice on how to interact with clients amid a financial crisis.
Some have gone so far as to predict 2009 will be the end of Bloch's tenor as chief, with unconfirmed rumours suggesting the FPA board will soon call for her resignation.
Bloch has shot down this suggestion as unfounded.
"The board has expressed its unanimous support for what the FPA is doing, for our process within the disciplinary and complaints framework and we continue to keep the board informed at all times," she says.
"I'm not going anywhere."
Instead of languishing as a result of the negative comments, Bloch and the FPA intend to regain the members' trust, with the next six months set to possibly be the association's biggest test to date. "There is no doubt though that the community has a low-level awareness of the FPA as a professional association, of the CFP [certified financial planner] mark and of the value of advice because only three out of 10 Australians still engage with a financial planner," she says.
"Having said that though, I think we've made great improvements to that awareness over the last few years, but there are still issues that underpin the lack of confidence that we need to be aware of, and Storm is one of them at the moment that we can't ignore."
While it may surprise many, Bloch has gone on the record a number of times expressing the view that a collapse like Storm cannot be prevented.
"The FPA is trying very hard to get out to the community that the vast majority of our members continue to comply with the code of ethics and rules of professional conduct, that Storm is a contained and unique, I can't say isolated because it clearly affects a number of people, but a unique and contained situation," she says.
"And because Storm was a member and because a number of their advisers are members we can hold them to account and we will hold them to account if there are breaches to our code or rules. Which means what we're trying to say is that we cannot possibly prevent these sorts of situations and occurrences from occurring.
"It's part of a free and open market, but by the same token if members sign up to higher standards and hold themselves out to be accountable and something goes wrong, then that is an additional safeguard from the community's point of view that means that the professional association can do something and can apply the force of our professional framework."
Member support
For the FPA to lead financial planners through the next six months the association needs the support of its members, Bloch says.
"We will deal with the differences, we will come to a common understanding with the government, with the regulator, with our membership. But the common purpose has to override the differences," she says.
"Our message to financial planners and members of the FPA is that now is the time to stand together to confirm the value of good professional financial advice, to confirm that advice should be accessible and affordable, to confirm the benefits of being a member of a professional association, to confirm the benefits of a strong regulatory environment that we work within.
"[It is time] to look for improvements, to plug the gaps and to once and for all deal with some of the issues that have plagued us for probably too long now."
It is also time for the industry to look forward and start establishing what collectively is needed and what solid vision it will choose to follow, she says.
She believes the association will get there down the track, with the next six months to be focused on introspection.
"There is no point doing the introspection without actually understanding the external market. I think after we have our vision, and when we have our issues on the table and when we are a long way down the track, we can think about what we present to the community, which will still always revolve around the value of advice and around our certified financial planner designation. But how that is actually delivered and what the particular message might be might change over the next six months," she says.
"I can also say that I don't know if the FPA is always perfect. We've always tried to have a two-way exchange. We're always out there talking to our chapters, our members, to the community, to the media, we're very accessible and so we do expect criticism. Sometimes it's appropriate, sometimes it's unfair and I just think that's the way things are."
However, as a starting point, the industry should at least agree on some issues and then disagrees on others, she says. "I do think the next six months are going to be very difficult, not just because of the economic situation but because we're going to be very challenged, we're going to be confronted with issues we may not like, and it's the role of the FPA to put those issues on the table," she says.
"I'm not sure our members really appreciate that. It's not always necessarily FPA policy to say certain things, but it is our job to challenge, represent, to deal with some issues so that we can move forward. And unfortunately that sometimes puts us in a difficult position, but we also have a strategic plan in place where the board has a plan and it needs to stick to a plan, but at the same time deal with some of the emerging issues."
Parliamentary taskforce
One of the FPA's first initiatives to regain member respect and trust is through the association's development of a parliamentary task force.
The taskforce was formed late last month to address the Parliamentary Joint Committee on Corporations and Financial Services' inquiry into recent corporate collapses in Australia.
On 26 February, the parliamentary committee announced it plans to conduct an inquiry into issues associated with recent financial product company collapses, including the role played by financial advisers.
The inquiry will also look at the state of the general regulatory environment; the role played by remuneration models, such as commissions; the role of marketing and advertising in financial product distribution; the licensing arrangements for those who sold the financial products and services; and the consumer protection and insurance arrangements in place.
It will recommend any necessary legislative or regulatory change on these issues. In conducting its inquiry, the committee has made a decision to focus specifically on non-superannuation products and services.
Bloch has already spoken out regarding the inquiry.
While the FPA supports the government's plans, the association was quick to call for fairness towards financial planners.
Commenting in response to the announcement of the inquiry on February 27, Bloch said: "We call on the government to ensure that this inquiry is fair and open. A witch-hunt or an attempt to enable one sector to get a competitive advantage over another will not achieve anything.
"FPA members were not involved in Opes Prime or Lehman Brothers and the Royal Bank of Scotland. To even imply that financial planners are the cause of all the named 'and other' corporate failures in Australia is offensive and misguided."
She said media and parliamentary commentary had already revealed a worrying misunderstanding of the role of financial advisers and the causes behind the named corporate collapses.
"This indicates we may not get a fair hearing and people are already jumping to conclusions," she said.
The FPA's taskforce was formed on 27 February - a day after the inquiry was announced.
The taskforce will be chaired by Hood Sweeney Securities executive and FPA board member Matthew Rowe. Other members of the taskforce will be made up of a cross section of FPA members, according to Bloch.
"The taskforce will consult with members, it will look at all the issues, it will represent the FPA at any parliamentary inquiry hearings and it will make sure that it does two things: it will set the record straight in terms of what we have achieved and what to protect, but it will put on the agenda the issues that we think need to be addressed," she says. "We hope that this cross-section of our membership through this taskforce will look for common ground that will unify our membership. Now is not the time to be having a go at each other or to feel incensed or to feel under attack. Now is the time to see this as a good opportunity to put our case forward and to put our case for reform forward.
"There is no doubt that the federal Labor government have said all along that they are particularly focused on superannuation, that they are particularly focused on protecting the super guarantee and ensuring every superannuant has as much in their retirement pot at the end of the day as possible and they have therefore pointed to areas that they don't necessarily agree with.
"That's their view and we need to understand where they are coming from and we need to respond with the community in mind."
Last week, the FPA called on the government to address key policy changes to Australia's retirement income system to ensure all retirees were adequately catered for.
In its submission to the government's Tax Review Panel, key areas the association highlighted as needing change were tax rebates on superannuation contributions for low-income earners and a two-tiered age pension system.
"The FPA's vision for the retirement income system is to ensure that Australians achieve a comfortable retirement based on a system that is fair, flexible, accessible and sustainable," Bloch said.
"We would also encourage Australians to aspire to an adequate self-funded retirement, but with a pension system to support those who have been unable to achieve this.
"The delivery of an inclusive and effective retirement income system is a significant challenge facing Australia. Meeting this challenge requires fundamental consideration of the hurdles to be overcome and innovative thinking on how retirees' needs can be met."
The association's submission also recommends policies to encourage a savings culture and reduce household debt.
"This cannot adequately be achieved without ensuring appropriate protection mechanisms are available to consumers," Bloch said.
"Hence, the FPA has proposed changes to the insurance system to address the current protection gap in Australia."
The FPA also proposes the system be underpinned by initiatives to improve consumer financial literacy and capability.
"We propose improving consumer access to affordable advice to help Australians to prepare to fund their own retirement," Bloch said.
Affordable advice
Another initiative on the association's agenda is affordable advice.
"Accessible, affordable advice remains very high on the agenda and it speaks to the issues that we've already addressed, like short-form disclosure, like sorting out inter-product advice, like making sure we have a level playing field so that financial planners can give single issue advice or comprehensive advice but the cost is commensurate with the cost of advice," Bloch says.
The biggest hurdle the FPA may face in regards to addressing affordable advice is clarity.
The association needs to be very clear about how it charges for advice and the different methods for charging. It is this area the FPA is putting a lot of time and effort into, Bloch says.
The association also needs to try to achieve consistency so advisers can help consumers compare fees and charges so they can choose the right method for them in paying for advice, she says.
"I think that's really important, but the whole quest for ensuring more people can access advice according to their needs remains a very big priority for us," she says.
Regaining consumer trust
As well as re-evaluating the way the association deals with its members, the FPA is also reviewing the way it is reaching consumers.
Another item on the FPA's priority list is whether or not it needs to review its value of advice campaign.
"We might find that we are still back with the 'good advice is money well spent' moniker," Bloch says.
"We've had the value of advice campaign, it's now come to the end of its third year, and I think it's a good time to reflect on whether that is the right campaign going forward or whether perhaps after the next six months we need to look at something else."
As well as focusing on wider initiatives, the FPA is aware members will not always agree with how the association tackles issues.
While the FPA's door is always open to member feedback, the fact members comment to the wider community and media about their gripes is just part of the job, according to Bloch.
"I would love to be able to say that it would be better for members to do that [give FPA feedback] but I appreciate their right to speak out on issues that are of great concern. And I understand that members do that with the interests of the profession at heart," she says.
"Unfortunately sometimes to the community it looks like an internal war, it looks like we're just self-serving and we don't have the community in mind.
"I understand that members do have the community in mind and I understand they come to the debate with the right intentions, but I think we just have to accept that these are difficult times, that people are unsettled, have concerns and we need to respond to those concerns.
"My message is let's try and at least agree to the common purpose, let's try and at least rally together around the things we absolutely all agree with and then let's try and have the debate about the differences within the context of the good things. Sometimes it's not clear that there is the common purpose and common understanding. Sometimes it looks like we're just having a go at everything."
