Financial Planning Association of Australia chief professional officer Deen Sanders would not be where he is today without the advice of a wise client. “I was working at Barclays and he told me to leave banking and follow my dreams,” says Sanders. “I took his advice and escaped banking with the tattered remnants of my soul.”
Sanders became a social worker and used the skills he had learned during his time in banking. “I was good at making complex business issues simple.” A consulting role at the Australian Credit Union was next. “The Consumer Credit Act was being rolled out and I helped the Credit Union become compliant. I realised that is what I was good at.”
A stint at Zurich in 2000 was followed by the roles that set Sanders on the path to financial advice. “Australia wanted to underpin the industry with qualifications and I was national project director of the Government’s skills and qualifications in financial services project. I was respon-sible for building an educational frame-work for all 22 sectors. It showed me advisers are the gateway to the industry.”
However, after noticing that many advisers lacked professional standards, Sanders moved to the Financial Services Education Agency, the Australian equivalent of the UK’s skills council, in 2002, where he worked with the Australian regulator to introduce a new educational framework.
During his time at the FSEA, he came into contact with the FPA. “I spent my final year at the FSEA pointing at the advisory sector, saying we needed more profess-ionalism. In 2006, the FPA told me to stop complaining and gave me carte blanche.”
Sanders says the high point of his time at the FPA so far has been the launch of its professional regulation suite in 2009. “It was our roadmap for Australian financial planning.” Now, the FPA wants to roll out a similar framework across the globe. “We are trying to convince 24 countries to get together and grow financial planning’s professionalism,” he says. This was debated in Washington, DC at an international financial planning conference recently but Sanders is aware that global change may take some time.
The FPA is also in the middle of a three-year £9.6m domestic campaign. “We found financial advisers were as sceptical about their colleagues as the wider community. We are trying to make FPA members feel proud so the campaign is built around the expertise of advisers.”
All this takes place against a backdrop of regulatory change. The Australian regulator has banned commission not only on investment products, as in the UK, but also on life insurance within superannuation. Sanders believes this is a result of Government anxiety.
“Supers underpin our whole financial system. There is $1.2trn in there and the government is sensitive about it. There is a ’do not touch the cookie jar’ mentality and that is what the commission ban is focused on.”
He says advisers have been positive about the commission ban on investment products. “It has not had the same point of contention as it has in other jurisdictions. We initiated this debate in 2000 before the Government got involved. I am not surprised advisers are dragging their feet elsewhere. If we all rushed to do what governments asked we would have a horrifying time of it.”
Australia has also gone further than the UK on qualifications. From 2013, advisers must have a degree to be an FPA member. Sanders offers some words of warning to the UK regulator. “The introduction of mandatory qualifications was painful. We lost 20-30 per cent of the industry. People underestimate how costly education is.”
Sanders says long-term educational engagement is the best means of ensuring an advisory population is fit for purpose. “Education is meant to change behaviour. Assessment just checks competency. That is why the FPA builds strategic relationships with universities rather than just stealing their graduates.”
The FPA established a Future of Financial Planning council in 2004 to find ways of attracting fresh blood to the industry. Today, more than 700 Australian students are enrolled in financial planning degrees.
The final piece of the regulatory puzzle is independence. “Our regulatory frame-work has not been conducive to independence. Financial services operates under the Corporations Act, meaning licences are awarded to corporations, not individual advisers.
“If the UK definition of independence relating to products were adopted here, everyone would be independent. Every licensee can access the whole market-place, even banks. The problem is that revenue flows to the institution. I disagree with the UK’s model of independence but the Australian situation is not perfect. I would like to see independence meaning independent from conflict.”
Although existing legislation is problematic for Australian advisers, new legislation is causing even more consternation. The Future of Financial Advice reforms, which have just gone through their first tranche, represent the FPA’s biggest obstacles.
Sanders says: “The opt-in is causing a lot of concern. Most advisory relationships are based on a client being charged until they opt out but our government is pursuing the argument that if a client does not sign renewal documents every two years, you must stop charging them. Adviser liability if a client forgets to renew the contract is huge.”
The second piece of legislation, which defines best interest, is also worrying. “Advisers will be fined $250,000 if they fail to show they had the client’s best interests in mind. The licensee will also get fined $1m, which could lead to legal battles between advisers and licensees.”
But Sanders is optimistic about the future. “We are working on a similar model to the UK’s approved body notion, with everyone belonging to a professional association. The FPA will probably be the biggest beneficiary of that system because we are the strongest contender.”
Born: 1966, in Gloucester, near Sydney, Australia
Lives: Sydney with wife and two children
Education: Degrees in psychology, business and law, doctorate in professions, regulations and ethics
Career: 2006-present: chief professional officer, Financial Planning Association of Australia; 2003-06: general manager, Financial Services Education Agency Australia; 2001-03: national project director, National Finance Industry Training Advisory Body; 1994-99: human resources and change management, New England Credit Union; 1999-2001: director, Why Corporation Consultancy; 1991-94: programme director/social worker, Mission Australia; 1991-92: intern psychologist, Jansen and Newman; 1989-91: business banking officer, Barclays; 1987-89: bank officer, State Bank of NSW
Likes: Motorbikes, research journals and a good intellectual challenge
Dislikes: Short-term thinking and poor public policy
Drives: Alfa Romeo
Book: Trashy, pacey crime thrillers. I spend all day buried in academic tomes
Film: Any, I love all films
Album: Anything by Mumford and Sons
Career ambition: I would like to bring the regulatory and professional sides of the industry together in the pursuit of better consumer protection
Life ambition: To contribute to change by building trusted, competent ethical professionals valued by society
If I wasn’t doing this I would be…Running my own community service in a combined legal and psychology practice