21 November 2007 
 
The Institute of Chartered Accountants in Australia (the Institute) today released a white paper entitled Key observations: A forum on the financial planning industry.  
 
This white paper has been produced as a result of a financial planning industry forum facilitated by the Institute to discuss the paper Reinventing financial planning commissioned by the Institute and written by Chartered Accountant, Robert M C Brown. The forum, which was designed to encourage open communication and debate, brought together industry associations, consumer advocates, regulators, product manufacturers, ‘dealer’ groups and practitioners. 
 
“The pleasing aspect to come out of this forum was the general agreement among delegates regarding the importance of the financial planning industry, as it continues to grow and head towards professionalism,” said Hugh Elvy, Manager Financial Planning and Superannuation, Institute of Chartered Accountants in Australia.  
 
Reinventing financial planning provides important insights into the meaning of ‘profession’, the industry’s structure, its cultural origins, educational standards and the remuneration debate.  
 
The paper’s central proposition is that the adoption of a genuine, non-product-based fee-for-service remuneration model will lead to a relationship of greater trust between financial planners and their clients. This trust will then lead to lower levels of intrusive, prescriptive legislation, and lower costs of advice, which will consequently lead to wider access by many more Australians to affordable independent advice.  
 
“The way forward to ensure a sustainable long-term future for financial planners is for the industry to collectively recognise the need to remove remuneration models, which are based on percentages, and replace them with genuine fee-for-service arrangements that have no connection with products or investable funds.” Elvy said.  
 
“While the forum delegates did not agree on every issue, particularly remuneration, all agreed on the importance of lifting educational standards and qualifications, the broadening of a pro bono culture among financial planners and the enhancement of consumer financial literacy within an evolving industry.”  
 
Key observations: A forum on the financial planning industry acknowledges that the industry has worked hard to deal with conflicts of interest, even to the point of introducing mandatory requirements to deal with them.  
 
However, the Institute argues that while disclosure and transparency are vitally important in dealing with such conflicts, they are not the complete answer. The answer lies in solving both the real and perceived structural conflicts of interest, that mere disclosure and transparency do not fully address.  
 
“The issues presented in Reinventing financial planning offer a best practice model for the provision of financial planning. By taking up the mantle for reinvention itself, the financial planning industry can shape the future direction of the sector, effectively minimising the need for legislative intervention. It is important that voluntary reform is embraced for the future benefit of the industry itself and the community it serves.” Elvy said.  
 
Elvy believes both the white paper and Brown’s paper will contribute to raising the professional profile of financial planners for the benefit of planners themselves and their clients. 
 
The white paper, Key observations: A forum on the financial planning industry and Brown’s paper, Reinventing financial planning are available on the Institute’s website www.charteredaccountants.com.au  
 
 
ENDS 
 
Media enquiries please contact: 
Ben McAlary 
Institute of Chartered Accountants in Australia 
Ph: 02 9290 5586