Deborah Kent remembers when life (and finance) was a lot simpler for the budding financial planner – but even with all of the hurdles the industry has faced, she still sees a very bright future for the profession.
What attracted you to financial advice originally?
When I started at the St. George Building Society many years ago, they started their own financial planning business. I realised it was something I wanted to do because I enjoyed the interaction with clients – dealing with their sometimes complex circumstances and helping to solve them and put them in a good position.
How was the industry different back then?
It was very different. Very new. Realistically, you never read anything about finance in the papers that much. There were stock prices in the AFR, but most consumers out there only really knew about property and bank accounts. Shares were considered to be for wealthy people. It was only after CBA listed in ’88, right after the ’87 crash, that Mums and Dads started buying stocks!
What happened after the crash?
It was such a big event. I remember watching our screen in our office turn red – so red you couldn’t even see what was going on, it was happening so fast. What followed was interesting, because back then we just had insurance; insurance-based products. Friendly society bonds and things like that. Managed funds were only just starting to appear, but then it evolved from there.
Obviously one of the biggest drivers was the superannuation guarantee, along with the asset tests at Centrelink. Suddenly people needed to seek advice, because the wisdom then was that people just retired at 65 and got the pension. Life was a lot simpler.
Have people’s attitudes to advice changed over that period?
Well, the proportion of the population not seeking advice has always been a problem. Statistics show those one-in-eight Australians who get advice are in a far better position than those who don’t. And there’s still a lot of confusion about what advisers actually do – I still get calls about mortgages, for instance.
But there are other myths, like that advisers are only for wealthy people. And given a lot of the press around the industry lately, there’s been a bit of fear. Trepidation.
What are they generally afraid of?
It’s sort of, “What are they going to do? Take my money? Charge me fees I don’t understand?” It’s fair to say that, as an industry, we’ve overcomplicated what we do. Statements of advice are very confusing for a client.
The only thing we can really do about that is educate people. ASIC does that through MoneySmart – the FPA and AFA have similar resources. It’s not an easy thing to change the conversation, but we aren’t going to get people to the table unless we can identify a problem. They need to know they’re going to a person who’s working in their best interests and that they, in their words, aren’t going to get “ripped off.”
Is there more to be done, education-wise?
I think it needs to start at the school level. Start teaching kids about money and their relationship with money. How is it earned? How much is spent, how much is saved? Children tend to inherit their parents’ attitudes to money, so if you have a parent who’s often loading up on debt, kids will start doing that as well. This means we need to educate the parents as well.
Speaking of education, and the ongoing focus on the professionalisation of financial planning, what would you say to advisers who are confused about their place in the industry?
I’d say regulation is always going to be around. We’ve had the Financial System Inquiry, FoFA, professional standards reforms, the life insurance framework … It’s always going to be there. But my view is that advisers are very resilient. Like anyone, they’re going to be averse to change, but because of that resilience they’re going to come to the party.
And yes, we’ve got a period of time where it’s going to be difficult for some, but those who want to continue to do the great job they do, they’ll step up and do whatever’s needed. Even though the industry is changing, it’s very exciting. Even though we’ve got a few pain points to get there, I see a fabulous future for advisers.
Thanks very much for your time, Deborah.
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