1 Comment 1 Commentby Susan Edmunds
Maria Wilton, Australian CFA Society’s Diversity Committee Chair
New Zealand’s CFA Society last night launched a new associate membership option, aimed at financial advisers and institutions who want to lift professionalism in the sector.
It enables financial professionals who are not charterholders to come under the CFA Society and its code of ethics, to distinguish themselves from others in the market.
Maria Wilton, chair of the Australian CFA society’s diversity committee, said there was work to be done on both sides of the Tasman to improve the perceptions of the sector.
Wilton is former managing director of Franklin Templeton Investments.
Revelations of misconduct in the Australian financial services industry, which came to light through the Royal Commission of Inquiry, had been a shock, she said.
The Future of Financial Advice reforms had been designed to build trust and confidence in the Australian financial services sector but clearly had not achieved that, she said.
“Industry cannot rely on government regulation to solve its problems. There needs to be a response within the industry, setting standards, credentialing and making sure people are well-qualified.”
She said the Australian revelations did not come to light until the inquiry process was initiated – regulators’ “please explain” letters, much like those sent by the Reserve Bank and Financial Markets Authority in New Zealand, did not have the same effect.
She said, while there was no evidence that there was misconduct here – there had been repeated suggestions of problems in Australia before the Commission’s work began, it was hard to imagine that the two sectors were so completely different that there was no cause for concern at all.
“The industry needs to step up in order for it to rebuild trust. We need to ensure people in our businesses have the right skills and experience to be doing the job… at the end of the day you can’t regulate for conduct. You can’t require diligence and ethics. That comes from culture.”
She said vertically integrated organisations were an issue for the industry.
FMA chief executive Rob Everett said last month that in an ideal world, organisations that manufactured product would not employ advisers to steer investors into those products. But he said New Zealand was under-served by independent advisers.
Wilton agreed it was an issue.
"You can put the most ethical person, the most client-focused person in the world, into an organisation where they are required to choose from a set menu of products and remunerated on the basis of selling those - and you'd expect them to come up with a portfolio that's going to look a certain way."
She said when people were incentivised, either financially or through the pressure to allocate within the same business, it created certain outcomes that were not always in clients' best interests.
"The industry needs to step up."
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