Pauline Vamos lets out a long sigh. She has been speaking rapidly for the past 10 minutes.
On the phone from Adelaide, just hours out from the Association of Superannuation Funds of Australia's (ASFA) annual conference, the industry chief is suddenly silent.
"I'm exhausted," she finally blurts out.
Vamos is referring to the past 12 months. She describes it as a bit like the transition from a teenager to an adult. In short, "it has been hell", she says.
In the past year, the sector has experienced the highs of individual achievements, the lows of mass change and potentially one of the highest levels of uncertainty from both participants and their clients.
In January, the debate surrounding the future of Australia's financial services sector shifted into gear. The Labor government released its feedback to the Australian Financial Centre Forum's report on Australia as a financial centre, aka the Johnson report.
The stage was set.
The government, through the then minister for financial services, superannuation and corporate law, Chris Bowen, had given the government's strongest backing of the industry.
The Rudd government had made the decision to push ahead and promote Australia as the next financial services hub. In doing so, Bowen increased ASIC's powers, providing the corporate watchdog with a new, more expensive collar.
A month later in February, Bowen accused opposition leader Tony Abbott of being a "risk to national superannuation and the savings pool" after Abbott used his book to question the value of the government's ideals on Australians saving through their superannuation.
In March, the government appointed Medicare Australia to operate a small business clearing house, prompting a number of Australia's largest superannuation fund administrators, AAS, Pillar Administration and Superpartners, to use a common set of protocols to cover the movement of data and money between superannuation funds.
Industry momentum was building. While many put the government's sudden interest in the sector down to it being an election year and deadlines approaching for outstanding reviews, few could predict the change that was about to hit.
On 26 April, the Rudd government delivered its response to the Ripoll report in the form of the Future of Financial Advice (FOFA) reforms. It would have staggering consequences for the industry.
While Australia's retail sector attempted to digest the impact of FOFA, the government used the budget to announce its response to the Henry tax review, including boosting the superannuation guarantee (SG) from 9 per cent to 12 per cent, tax concessions for the over 50s and providing a rebate to low-income earners.
It was only five months into the year and already a large swell of change and emotion had started.
Less than two months later on 24 June, havoc erupted - Prime Minister Kevin Rudd was ousted by his deputy, Julia Gillard.
Opposition calls for an early election followed and were shortly granted. The Rudd government was no more. Rudd's cabinet was thrown into caretaker mode with significant impact on the financial services industry.
FOFA consultation stalled with widespread uncertainty sweeping through the industry at alarming speed.
In August, Australian voters headed to the polls, resulting in Australia's first hung parliament since 1941. Two weeks later three independent members of parliament ended the gridlock with a Gillard government installed, including a new look cabinet minus Bowen.
The big challenges for 2010
"I think firstly the uncertainty surrounding the election had an enormous impact," Vamos recalls.
"I suppose it was the time pressures because we had the Cooper response, then we were told by Chris Bowen he wanted to respond in early August to give an initial response, so it meant that we had to very quickly engage with the final report in order to give Bowen our view."
She says the shift the industry had to adopt in terms of its mentality was huge. One moment the industry, particularly the superannuation industry, is elated with the SG announcement, the next it all comes to a standstill.
"When we had the 9 to 12 per cent, the rebates for the low-income earners and the whole contribution caps, you should have seen the emails going around the industry," Vamos says.
"There were high fives everywhere. Then we had the election results and we thought 'oh my god' and it was a bit like we've got to start again."
FPA chief Mark Rantall agrees the election result was one of the biggest challenges of the year.
"I think certainly the period when the election was on where you go through a period where consultation is stopped," Rantall says.
"On the one hand it was a good period to be able to continue to be working to put out our position together, but on the other hand we were operating in a period of uncertainty . not knowing which government was going to be in power and with all likelihood at the very least the change in minister.
"You don't start from scratch, but it does mean that you have to re-engage with a whole variety of different people to continue that communication and engagement."
He says while the FPA supports many of the reforms under FOFA, there needs to be greater engagement and communication with Treasury and government to make sure the reforms are implemented in a way that doesn't negatively impact on adviser businesses while at the same time being in the public's interest.
Adviser sentiment was another key challenge for the association this year, he says. "If you look at the adviser sentiment you've sort of had advisers who have gone through the GFC (global financial crisis), they've been the subject of three government reforms in Henry, Ripoll and Cooper and in addition to that they have been under scrutiny with media campaigns of various designs and guises," he says.
"You kind of get the sense that it would be kind of understandable to come out of the back of that feeling a little battle weary. I think particularly as they have to sort of now look at the impacts of reforms on their business."
For Association of Financial Advisers (AFA) chief Richard Klipin, the main message of 2010 has been about commitment and leadership.
"We're in the middle of FOFA, we've come through an election campaign, we've had a huge amount of uncertainty and I think the biggest challenge the AFA has had and indeed advisers have had is to stay resolute and clear about what, for the AFA, what our proposition is and what our members deliver to the community," Klipin says.
"That has really been the challenge rather than be distracted by side battles or side issues or accepting some of the commentary from the naysayers of the industry."
In the mind of John Brogden, there is no doubt the government's recommendations will significantly change the industry.
"There is no doubt that the substance of those recommendations will significantly change the financial services sector, in particular obviously in the delivery of financial advice and default superannuation," the Financial Services Council (FSC) chief says.
Brogden says the biggest challenge for the year has been to ensure the FSC gets the right level of reform without actually over-regulating.
"I think the result has been that about 80 per cent of the recommendations of the reports are very sensible and important and necessary and we have either proposed those recommendations or we support those recommendations," he says.
Self-Managed Super Fund Professionals' Association of Australia (SPAA) chief Andrea Slattery says as well as the reviews and government work, reinforcing the importance of the self-managed superannuation fund (SMSF) industry has been a big-ticket item for 2010.
"I think getting the message out about the SMSF industry, I don't think it has been difficult as it has been in the past. It's still a significant issue, people don't understand it and don't understand how positive it is and what a great opportunity it is to assist in sort of being the main part of the savings sector," Slattery says.
"I think more and more people are coming to understand the SMSF sector is a good and positive and efficient sector, but I think there is still a requirement for people in government and Treasury and people in the industry in general for people to understand it's a part of the sector and not something to be fearful of and for the consumer to understand those that should be in it and those that shouldn't be in it."
Big surprises for 2010
At the top of Vamos's list of 2010 surprises are the budget announcements.
"We had a bit of an idea about the caps but we didn't expect the SG. So that was a real surprise," she says.
"I think the disappointment has been the fact that I really hoped as the immediate aftermath of the election while I was listening to all parties, that sense of collaboration they were talking about . I personally thought we might actually get a unified position on superannuation policy and stop all the changes.
"Well the biggest disappointment of that [is it] clearly isn't going to happen."
For Brogden, the past year hasn't specifically been about surprises, but more about disappointments.
"I think there has been disappointments in that we weren't surprised with some recommendations but we're disappointed with them," he says.
He points to the government's proposal for the MySuper product to illustrate his point.
"The reality is that there are very cheap and cheerful low products in the superannuation marketplace now, whether it's an industry fund product or a retail product like BT Super For Life," he says.
"I think frankly that the Cooper recommendations for MySuper is more about politics than symbolism and the reality of the market."
Brogden uses First State Super in New South Wales, the government employee fund, as another example, stating it has one of the cheapest if not the cheapest low-cost product in the market.
"In order to provide the MySuper market it will actually cost more because of the level of regulation," he says.
"I think what it does in a philosophical sense is that it dumbs down superannuation rather than striving for the goal of greater engagement and I acknowledge that is hard; we've gone exactly the other way and completely patronise the community."
Klipin also believes there were many more disappointments than surprises for the year. "I think the industry through 2008, '09 and '10 has in some ways been an easy target to kick and kick around and there has been a fair bit of uninformed alignment of the industry," he says.
"So our view, very strongly, is that government needs to lead, government needs to advocate for what the financial services industry does and provides."
He says the government has to start seeing the advice profession as part of the solution to some of the major issues facing the community, including issues around an older and ageing population, around the low levels of super savings and the low levels of insurance.
For Slattery, there are too many issues that are still serious challenges that the industry hasn't met. One is the contribution caps.
"I think if we can't raise the contribution caps, then the incentive for people to actually save in super is actually a disincentive, particularly if we have an increase in adequacy which we believe is appropriate," Slattery says.
"I think the confidence in the system by finishing off these pieces of legislation and getting them settled, getting the government to stop making super a political football or a honey pot where they can just dip their fingers in if they are in need of funding and to think long term, so not short term, about Australia's future savings. That's the only way to ensure real confidence for the consumer."
She says the new financial services minister and assistant treasurer, Bill Shorten, plans to come out with Cooper before the end of the year.
"I think it's very important to have through the FOFA review a profession out of the superannuation and financial services world," she says.
"We've got a very real risk of not having that happen if we are not very careful because people want the minimum and we've got to realise that the minimum that has been in for the last number of years, that hasn't worked, and we need to create an opportunity where everyone is encouraged to build the integrity of the financial services world and to have a consumer focus."
She says she would also like to see the SMSF specialist auditor become a compulsory part of the registration of ASIC.
On the mind of members
As well as being on the front foot in terms of government change, 2010 has been a year of increased member engagement.
"We've upped our communication big time. I thought I could do a 'Voice' [bulletin] to our members once every two months on really important issues, but I've been doing one almost every week," Vamos says.
"I think a lot of consultants, a lot of research houses, a lot of those people who service the industry have been flat out."
She says the past year has been a costly one for the association, with a lot more money needed to invest in more research as well as recruitment and a number of budgets blown.
"I've had to increase my policy team by two and it's been so difficult because people in the industry have been so busy. So they will attend meetings and contribute, but there's no way they will have time to write anything," she says.
"Luckily with the reserve from the last few years we have been able to invest and we've had to, we've absolutely had to."
The uptick in member engagement ASFA has experienced has forced the association to reopen a Melbourne office.
"Because there has been such an area of uncertainty it's been absolutely necessary to engage with members face to face, and so that means a lot more travelling nationally," Vamos says.
"This year we realised we will need space in Melbourne so we have got a space in Melbourne. We closed our Melbourne office years ago."
Member engagement has also been a key theme for the AFA, with the advice group hiring former NSW opposition leader Kerry Chikarovski as a government consultant.
"The appointment of Kerry to the AFA team has just been a really important signal to our membership and to the marketplace that we're serious about standing up for what we believe in," Klipin says.
"We're serious about insuring that we are engaged in the political process and we're serious about the fact that there is a lot at stake here, not only for our members but for consumers."
He says the AFA has also commissioned a number of research papers this year in a bid to understand its membership.
He says the research found there is a component of the marketplace that is really concerned by the proposed reform.
"These are the people who are contemplating their future in the profession," he says.
"They are the people really in the sense that are most at risk when I talk about unintended consequences in saying 'you know what? I'm departing the industry' and we're not prepared to accept that as collateral damage, irrespective of what current or former government ministers may have said.
"The role that these people do, they are competent advisers, they serve their clients and their communities well and I believe it is our role to ensure that they can transition effectively into whatever new regime that comes in."
Another key concern for AFA members is the lack of strong debate over the reform bans on commissions and insurance, he says.
"Whilst we have a very constructive consultation process through FOFA and the team at Treasury, what we don't have is clear evidence in all the different areas of FOFA and that includes the issue of insurance and tinkering with revenue systems on insurance," he says.
"In fact, many of the FOFA recommendations we're yet to see high-quality substantial research that talks about the benefits, that talks about the costs, that talks about the consequences and indeed the unintended consequences of any of the moves. That's the issue the AFA will continue to argue constructively on.
"Looking through the prism of the consumer, the intent of FOFA is to make life better, easier and more transparent for the consumers. I'm not sure we're actually heading in that direction in that point in time."
In Brogden's view, FSC members understood reform was necessary and the association advocated many of the changes, but not all of them.
"We accept that some of it was inevitable, but some of this reform goes too far and our medium and long-term concern is that some of the things that we're going to put in place now the government will turn around in five years and regret, but sometimes these things are harder to repeal than to put in place," he says.
The FSC remains resolute in its opposition to MySuper "as it stands", he says.
"The disappointing thing is that we know behind the scenes most of the industry is opposed to MySuper, but we've been the only ones who have taken the debate to the street," he says.
"The Financial Services Council approach is that we will actively support the things we support, publicly endorse them."
Changing with the times
Earlier this year, Brodgen, as the FSC's new chief, took it upon himself, along with the then Investment and Financial Services Association (IFSA) board, to rebrand the association.
"I think our members have recognised the agenda there is to broaden our policy reach," he says of the change from IFSA to FSC.
"The objective was to broaden our mandate into broader economic policy and the objective has been to influence policy surrounding the regulatory, business and economic environment in which we invest."
As well as rebranding, at its annual conference in August this year the association boosted its stance on consumer protection through a new trustmark.
At the time, Brogden described the trustmark as being "like the heart foundation 'tick' denoting quality, our trustmark will send a clear message to consumers".
Four months later, he says the initiative has been well received.
"It was a very big move for us and is requiring a significant amount of work from us to ensure we get it right. We're in the middle of that process now," he says.
"We recognise that one of the critical outcomes of this massive process of reform we're going through at the moment, one of the most critical outcomes is that we establish and or rebuild trust with Australians in financial services."
Last month, the FPA followed a similar path in terms of rebranding, using its national conference to unveil a new logo and significant changes to its membership.
Under the changes, from July 2013 FPA membership will only be open to new members with an approved degree or higher qualifications.
New FPA members would need to undertake a supervised 'professional year' program to ensure they earn the right to represent FPA professionals in the community.
The changes also involved the creation of a new Financial Planning Education Council.
The FPA has also proposed changes such as discontinuing the principal member category and restricting FPA member voting to certified financial planner (CFP) professionals and associate financial planners only.
The body also intends to allow financial advisory practices the use of the FPA brand if 75 per cent of their practitioners are FPA members and 50 per cent are CFPs.
From mid-2011, the association will launch an ongoing consumer marketing and advertising campaign to promote the higher standards and professional standing of the FPA.
What 2011 will bring
Each association chief believes the next year will bring with it further detail on proposed changes under FOFA and Cooper.
"We will likely see legislation on both of them towards the end of next year," Brogden believes.
"Between now and then there is an extraordinary amount of detail and work to be done, particularly financial advice. These are complicated legislative areas where the risk of unintended consequences is quite high.
"I mean if you get a piece of legislation wrong, you could actually push out unintended consequence that could in fact make things worse. So working with the government and the new minister, Bill Shorten, and working with Treasury on the detail is very high on our agenda."
From an FSC standpoint, Brogden says the association intends to "pull out all stops" to help the government achieve the increase to a 12 per cent SG.
He says on the broader economic agenda the two important issues will be tax reform and climate change.
Slattery says Cooper and FOFA are also on SPAA's agenda.
"The big items are really about the couple of reviews, what's left over of the Henry, what's left over from the Cooper and what's starting of the FOFA, which is basically a conglomerate of three or four," she says.
"Cooper and FOFA will be the big ones in the next year."
Klipin says the AFA will continue its political and policy engagement as well as focus its attention on broader issues.
"But you know, associations can't just live on things that might happen in the policy arena; it's about delivering value to members in their world and what that means to most of our members are things around professional development, around education, around sharing success, sharing stories, it's about finding new talent in the marketplace," he says.
In Vamos's mind, the number one thing ASFA and the industry needs to focus on in 2011 is collaboration and working on increasing the SG.
"We must be able to compare like with like. There is no doubt about it," she says.
"[In terms of the SG] we have a lot of work to do with employer groups. We have to show them that the ageing population are their customers and if the customers don't have money, they don't have a business."
Asked if the industry is ready for change, Vamos believes so in the majority.
"There are people we will have to drag kicking and screaming," she says.
"There are people who have not taken the time to really look at the environment and we've got to bring them with us."
