Banking consumer advocate Peter Mair writes:

There can be few “professional”
groups so roundly and generally discredited as financial planners are in Australia.
It is, nonetheless, remarkable that this group enjoys political patronage
beyond the pale.
On Tuesday the Parliamentary
Secretary to the Treasurer, Chris Pearce, addressed the Association of
Independently Owned Financial Planners. This address was replete with the kind of inappropriate
platitudes about financial planners that we have come to expect from ministers
and their minions: wouldn’t you like to be a member of a profession described,
by Chris Pearce, as sound, professional – and above all, objective – when giving
financial planning advice? The full text of the platitudes Chris Pearce
spruiked about financial planners is hard to beat as an illustration of
“out of place” sentiments.

It has, of course, been bettered.
Famously, in late 2002, our Prime Minister referred to financial planners in Australia
as “quintessential small businesses”. More recently, the Corporations and
Financial Services Committee has distinguished
itself with an inappropriately partisan tone.

Last year on 9 November, in the course of
an oversight hearing of the Australian Securities and Investment Commission,
there was extensive partisan comment disguised as questions – with many put by
a likely “one termer” who was, and may well be again, a financial adviser. Insightfully, among many
other illustrations of his political naivety, this member asked ASIC “Do you
think the financial planning industry should exist?” – ASIC, diplomatically, declined
to give a forthright answer.

Ironically, also on Tuesday, Rainmaker, a
respected ratings agency for the superannuation industry published a report on
the superannuation industry with a now very familiar refrain:

New research reveals that industry super
funds delivered better performance for members in all sectors of the
superannuation industry … The survey marks the seventh time in a row that the
research has placed industry super funds ahead of retail master trusts in
delivering more to members.

The irony is that most financial planners never recommend to clients
that they put their superannuation savings with industry funds – in the normal
course, customers asking financial planners for the “best” advice about where
to put their superannuation funds are not given the advice that the rating
agencies consider “best”. Insightful observers of the financial planning
industry believe the main reason for this is that “industry funds” do not
pay commissions to financial planners for “selling” their products while the for-profit
funds that financial planners do recommend do pay hefty, lifetime commissions
to the “selling” planner.

Financial planning industry associations, well
aware of how this entrenched conflict of interest disadvantages customers
asking planners for their “best” advice, have not yet dealt resolutely with the
ongoing challenge – and neither have they sought to correct the continuing
disadvantage to clients still overpaying for bad advice given to them
previously.