Reason to be optimistic: advice over the horizon

Well said! Dave

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty - Winston Churchill. Good work Mr Haintz. Regards, Steve

The cup is half full for sure

The author commits a genetic fallacy when he seeks to represent Australia’s advice industry as ‘advanced’, simply by comparing it to other countries he believes are less advanced. It’s a poor argument and no evidence whatsoever of the merit or validity of the Australian model for consumers of financial planning services. The problem for Australian advisers is the same for advisers the world over – the advice industry is mired in platitudes masquerading as financial wisdom with many of its foundational concepts developed in the 80’s and 90’s now widely discredited. The industry remains wedded to outdated practices, processes, and concepts, and is unable or unwilling it seems, to evolve.? The critical failure of the mainstream advice industry is that it has been unable to figure out how to connect its advice to the actual achievement of client objectives. The ability to link the two parts is the very definition of financial planning. The inability (or unwillingness) to make the connection quantifiably (hence measurably) in ways meaningful to consumers (i.e. in connection with their objectives) makes it very difficult for consumers to determine the value of engaging a planner in the first place.? The 'digitalisation' of advice processes is not doing anything to solve this vexing issue either. Australia's major fintechs supporting advisers are not only failing to rise to meet the challenges, they hopelessly fail to even acknowledge the problems.?? Burdensome regulation and onerous compliance has its part to play in the decline of the industry, but the real reason is rather more straightforward - clients cannot see the value of paying for advice. They can't see the value because the industry refuses to quantify its value, preferring instead to promote value substitutes. The industry resists quantifying its value because to do so - for the vast majority, but not all, of practitioners - would reveal an inconvenient truth - for most ordinary hardworking Australians "financial advice" is a negative net-value adding proposition. With every bout of market volatility, the adviser's lack of a genuine investment value proposition (for e.g), is exposed. As Warren Buffett said "When the tide goes out, you get to see who's been swimming naked."?? The industry could face-up to the challenge (as other genuine professions do) and do the hard work but instead, it has gone on a desperate search for faux-value, promoting so-called 'soft skills' over the real work of financial advising. It tries to 'sell' financial planning as transparency, peace of mind, discipline, confidence, independence, trust, certainty, etc. It is prolific in its use of corporate-speak and weasel words. It co-opts words, changes their meaning, and/or uses the words interchangeably to suit the circumstances. Embarrassingly, the industry is often not sure of the meaning of words it employs frequently (e.g risk), or clients belatedly discover there is no generally accepted definition (e.g. 'balanced' 'growth', 'conservative'), and worse...that the vagueness is to their disadvantage and the industry's advantage! It resorts too quickly to analogy, creating not real understanding in the mind of the client but the pretense of understanding. You could not design a poorer foundation for informed decision-making. And consumers are finally, no longer willing to give the planning industry the benefit of the doubt.?? You can see it for yourself in this article where the author relies on nebulous, unquantifiable terms to represent the industry as more than it is. Australia’s industry is ‘up there with the best’ he says. It is ‘deeply aware of the challenges’. It is ‘advanced’. Clients are ‘happy’. There's a 'commitment to dealing with change' and 'greater understanding of how the market is evolving' because of course 'change is an opportunity'. There's more 'transparency'. 'Client focus' is rising, 'Education standards' are on the increase. All lovely things to say of course, but utter, utter nonsense.?? The academic institutions ride shotgun, providing intellectual cover because of course, it suits their recruitment drive to lower the bar by prioritising 'soft skills' over 'hard'. Do that for long enough and you've got an industry that thinks its job is to provide financial 'wellness' or 'money coaching'; you get an industry awash with underskilled, incompetent practitioners who shouldn't be allowed anywhere near other people's money. Right now, there is no transition happening (messy or otherwise). This is an industry in the choking grip of decline.??

Great article David, committed 'advice lead' business's will thrive.?