A few months ago I was invited to do a keynote speech with the CEO of the Commonwealth Bank, for an audience that consisted of 500 of the biggest movers and shakers in the finance industry.
The bank chief began his carefully worded talking points, suggesting that his bank was hoping that the government would “look at changing the financial advice laws” so that it could lower the cost of advice.
I couldn’t resist. I piped up: “Come on! Your motivation is to flog your financial products to as many people as you can.”
He shook his head and stared straight ahead.
The crowd went silent.
As we left the stage, no one spoke to me.
I felt like Miley Cyrus at an awards ceremony. Except the only twerking that was going on was from the suits in the room, who pocket $20 billion a year in fees from our super alone.
And all those billions clearly buy you a lot of influence.
Last week Finance Minister Mathias Cormann rushed through regulations that rolled back so-called Future of Financial Advice (FOFA) laws.
These laws would have been very damaging to the banks and their financial planners: they banned banks from rewarding their staff from steering its customers into their own products and required planners to write to each of their customers each year, to ask permission to keep skimming their accounts with commissions (no permission, no commissions).
Also, this week there have been calls for a Royal Commission to investigate the financial planning fraud that occurred at the CBA — but don’t hold your breath. Besides, the vast majority of financial planners in this country are professionals who do the best they can by their clients.
They just charge way too much.
Over your working life their fees compound and can cost the average worker as much as $300,000, according to ratings agency Chant West. Now that’s something that really deserves a Royal Commission — or at least some government intervention. However the finance Minister has already made up his mind — and sided with the banks.