On June 4 and 5 the heads of leading financial planning licensees met in the Blue Mountains west of Sydney for the annual Professional Planner Licensee Summit.
It’s fair to say the atmosphere around licensees has never been more febrile, stoked by two weeks of torrid testimony in the royal commission public hearings, a seemingly continuous stream (more a torrent, really) of revelations of poor advice and bad behaviour, and rising hysteria over the introduction of new education, professional and ethical standards.
I have some affinity with the licensee event, having previously worked for the event producer Conexus Financial, and having helped to establish and develop the event. It was originally called the Dealer Group summit, but has morphed into something broader in recent years, reflecting changes in the underlying structure of the industry.
The Summit has been a useful forum for licensee heads, a safe space to meet and discuss issues facing their businesses, and the businesses of advisers in their networks. It’s also fair to say that some have grasped that opportunity more enthusiastically and more authentically than others. Some have never attended in all of the eight or nine years it’s been running, claiming there was nothing they could learn from it. Perhaps, after all, there might have been a benefit in attending – and their performances at the royal commission might have not have been quite so disastrous if they had.
I judge engagement by how often and how consistently a licensee has attended the summit, and how willing they’ve been to be part of the panel sessions or other presentations.
There’s no statistical evidence to back up this opinion, and some of them might be shameless attention seekers, but it’s the best proxy I’ve currently got.
Nevertheless, it seems those who have been more engaged, more willing to discuss issues and more willing to face head-on the problems that were so obviously looming are those who will emerge in better shape, with closer relationships with advisers and ready to thrive in a post-royal commission, professional standards era.
What the winners have in common
A highlight of the licensee summit is the announcement of the licensees of the year, determined by research conducted by CoreData. In 2018 the institutionally branded licensee of the year was Commonwealth Financial Planning, the institutionally affiliated licensee, and overall licensee of the year, was Matrix Planning Solutions, and GPS Wealth was named independently owned licensee of the year.
Last week I talked to each of them (they didn’t know at the time they were winners, only that they were finalists), and a clear theme emerged. Each of the three winning licensees has quite deliberately tried to be an oasis of calm and control in a maelstrom of change and controversy – even the one you might have thought would be in greatest turmoil.
It’s not that these licensees are doing nothing. Far from it. But they recognise that not everything has to change at once, and in fact some things simply aren’t broken. Some things need to change right now, some things need to change soon, and some things don’t really need to change with much urgency at all. Being clear on which is which, prioritising them and supporting advisers appropriately is a far preferable approach to, at one extreme, running around like Chicken Little, and, at the other extreme, acting like ostriches with their heads in the sand.
Commonwealth Bank general manager of bank planning Hugh Humphrey puts it like this: “There are so many moving parts just generally around the industry – education standards, regulation, complaints handling – and it’s reassuring to people to be quite deliberate about things that you are not moving and to provide some degree of certainty and predictability.”
GPS managing director Grahame Evans says: “The calmer you can make it for [advisers] in this difficult time, while still expressing the need for urgency and improvement in what they’re doing, I think is the secret.”
And Matrix chief executive officer Todd Kardash says: “It’s not always plain sailing, and licensees and advisers clash over different points. But if you’ve got a strong relationship and you communicate through those tougher times, I think it stands you in good stead to have a strong ongoing future with them.”
Sometimes doing nothing is just as deliberate and active a decision as doing something, and a more effective decision than doing something simply for the sake of it. As the US actor, director and producer Martin Gabel once told a performer renowned for her over-acting: “Don’t just do something, stand there!”
The essence of true leadership
All licensees would claim to have done something similar (or to have not done something similar, if you see what I mean). But for the three LotY winners it’s clear that the effort and the result has landed convincingly for advisers and is reflected in those advisers’ opinions of the licensees.
Whatever a licensee is doing, whether it’s something or nothing, communicating the how and why of the decision is paramount. People are willing to follow a leader if they think the leader has their best interests at heart, and if they think the leader knows where they’re going and what they’re doing. Populists and charismatics can lead for only so long before a lack of substance or actual underlying principles are exposed.
Leadership isn’t about pandering to followers’ wants, nor appealing to base instincts; sometimes real leadership is about making decisions that are right even if not popular, and then through the power of argument and the weight of evidence demonstrating why the decision is the best one.
Licensees that fail genuinely to lead, that reinforce prejudices and continuing allow the notion to fester that reform of financial planning isn’t necessary, are not doing their advisers any favours at all. And judging from the results of the LotY, those advisers know true leadership when they see it.
