Originally published | 5th February 2020
Heraclitus once said that “The only constant in life is change” and if you have been in the financial services industry for some time you would know that this phrase is as true back when you started as it is today.
It’s been some months since I wrote my last post and that’s because I have had change in my life. As with most change, it wasn’t wanted.
In my last post, I spoke about her battle with cancer and how it had created a new paradigm in our lives. Unfortunately, that paradigm shifted only days after that post when she lost her battle with cancer.
And there was the change.
It wasn’t wanted, or desired, but it happened. I had no chance to prepare for the change, because one day she was there, the next she wasn’t.
So how does this compare to our industry you might say?
Well simply put, change happens, and we don’t necessarily want it, but we have to prepare for it.
The biggest difference in our industry is that change doesn’t happen overnight. We’re given months and years to prepare.
But why is it that we (and I’m using the collective “we” here) spend so much time arguing against change, instead of better preparing for it?
Let’s look at some examples:
When FSR came into play on the 11th of March 2004, the education requirements to be a financial adviser were Diploma level study. At any given time, you could search on the internet and find businesses offering RG146 compliant courses to be done over the space of a weekend.
Before anyone hits back, I know that there are a lot of people out there, like me, who took their time to complete the course. But there were also a lot of people who didn’t.
So, the industry at the time didn’t do itself any favours by allowing these types of courses. The argument for our industry still exists. How can you properly advise someone on major financial issues, after doing a course that took you two days?
As we know, the outcome of this, and some other instances of poor behaviour, lead to the establishment of the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017. This Act gained royal assent on the 22 February 2017 and meant that all advisers needed to have a Degree level qualification in financial planning by the 1st of January 2024.
That’s almost seven years notice of change. Why do we still have industry participants complaining about the unfair nature of it and asking for extensions?
The second example is grandfathered revenue, specifically trail commissions.
In July 2013, the Future of Financial Advice reforms commenced and many in our industry took the opportunity to reshape their businesses to provide advice and financial services under a fee for service arrangement. Some changed the trail commission of the time to a flat fee that was charged and then commenced the necessary FDS and Renewal Requirements from there.
But some didn’t and now with Grandfathered revenue being wound up, their business revenue will reduce.
But the winding up of grandfathered revenue is not something that should be seen as new, it’s that a provision that was made in the original FoFA reforms is being closed. Therefore, businesses have had 7 years to prepare.
And I know there are arguments that will be aimed at me, but I am purely aiming a theory that change in our industry is inevitable and that we are given time to prepare.
Let me leave you with this thought from Albert Einstein:
“The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”
On the 17th of September 2019, I had to change my thinking personally, how will you change your thinking professionally?