Parliamentary Joint Committee on Corporations and Financial Services
In September 2009 Quantum was asked by the Parliamentary Joint Committee on Corporations and Financial Services (PJC) to appear as expert witnesses on the future of both financial planning and financial education.
Quantum's expert witnesses
Tim Mackay, Quantum's Chief Operating Officer appeared as an expert witness on financial planning issues and Claire Mackay, Quantum's Business Director appeared as an expert witness on financial training issues. Both Tim and Claire are highly qualified and experienced Certified Financial Planners.
Comments from the Parliamentary Joint Committee on Quantum's submission and evidence
"Thank you very much. We really do appreciate your submission. It was very detailed, of very good quality, as was your evidence" (Hon. Bernie Ripoll MP, Chairman Parliamentary Joint Committee on Corporations and Financial Services, Labour QLD).
"I thank you very much for your submission. I suspect there would be many in your industry that do not enjoy it; nonetheless, I thank you." (Senator Brett Mason, Deputy Chairman Parliamentary Joint Committee on Corporations and Financial Services, Liberal QLD).
"I was impressed by the comments you made about your academic qualifications. You would obviously like to see the bar lifted in terms of qualifications" (Hon. Chris Pearce MP, Liberal Federal Member for Aston VIC).
"In my own experience, I think that there would be very few AFSL holders who are also RTOs. So I think it is quite an interesting model that you have developed there. I think it is good for your own people as well as for your clients." (Hon. Chris Pearce MP, Liberal Federal Member for Aston VIC).
"Thank you very much. We really appreciate your submission and the detailed work you have gone to, and your presentation today." (Hon. Bernie Ripoll MP, Labour QLD).
Press release
Please view Quantum's latest press release relating to the PJC here.
Link to Hansard
Quantum Directors were asked their opinions on a wide range of topics. You can view the Parliament's Hansard transcripts that quote Quantum here.
Quantum's presentation to the PJC
Below we highlight the key points we made in our introductory remarks to the PJC:
Introductory remarks from Tim Mackay
“Thank you for the opportunity to appear before your committee. My name is Tim Mackay and with my colleague Claire we represent Quantum Financial Services.
Quantum is an independently owned, successful and growing financial planning firm and training organisation.
We are both Certified Financial Planners and Chartered Accountants and between us hold bachelors and masters degrees in Commerce, Economics, Law and Business Administration. Claire is also admitted to the NSW Supreme Court.
Australians today are concerned about the financial planning industry. And rightly so. They have seen recurring examples of rampant abuse of consumers and lack of professionalism shown by the advisors they trusted.
From Townsville to Geelong to Perth, if you were not personally impacted then you will know someone who was.
The focus of our submission is recommending practical reforms. With your help, we can boldly reform the financial planning industry so that consumer confidence and our profession will emerge stronger than ever.
It’s time for financial planners to be honest with themselves
As financial planners, we regret the actions of those financial planners who have abused their client’s trust.
As financial planners we take charge of our own destiny today by proudly and loudly pleading with you to give us an explicit statutory fiduciary duty to our clients.
We know that many in our industry are skeptical of how, and whether, an explicit fiduciary duty will work. There are many complicated issues to resolve but as professional financial planners we can make it work.
It’s time to empower consumers and increase competition by turning off the rivers of gold
It is a sad fact that in financial planning “he who pays me is my boss”. No one would consider allowing lobby groups to pay fees to politicians. Yet we allow product manufacturers to pay financial planners and dealer groups.
By rivers of gold we mean commissions and ANY other type of financial arrangement between product providers, platforms, dealer groups and advisors. The only parties who resist this reform are those who financially benefit from the rivers of gold. We recognise that it will be hard, unpopular and costly for many in our industry to undertake this reform. We do not accept that voluntary industry codes are sufficient. This reform is not about helping financial planners – it’s about helping consumers.
I will hand over to Claire who, if you were wondering, is also my sister.”
Introductory remarks from Claire Mackay
“My name is Claire Mackay. Quantum’s financial planning business specialises in strategic investment, retirement planning and superannuation advice. We advise our clients, we do not sell products.
It’s time to call the sales people what they are, sales people
In the interests of consumer transparency and protection, there should be a clear distinction between independent advisors and financial product sales people. Furthermore, there should be no difference in the standard to which either is held to – they should both have a fiduciary duty to their client. The aim of this is to provide clarity for consumers, not to make it easier for sales people to sell their products.
It’s time for the real financial planners to stand up
We propose the establishment of a Professional Standards Board which is independent, self funding with compulsory membership that sets high and uniform professional and ethical standards.
Only members can call themselves financial planners or financial advisors. Consumers will then have professional titles they can recognise and trust. We estimate the cost to clients of this reform at 1 cent per day. We are happy to discuss this further.
It’s time to raise the bar
We call on you to raise financial planning education and experience entry standards. We are proud that our submission was one of the few to recommend how you can implement this. We are happy to discuss this further.
As financial planners with a long future in the industry before us we are passionate and proud of the value we provide our clients. We are honoured to be our clients’ trusted advisor. We are the second generation to advise Quantum’s clients and we want the next generation to be proud of the profession we, with your leadership, reformed today."
Quantum's key recommendations from our PJC submission
Recommendation 1: Introduce regulatory changes to prohibit product providers from setting remuneration terms for intermediaries and require intermediaries to set their own remuneration arrangements with consumers.
Recommendation 2: Empower consumers by enabling them to stop paying financial planning advice related commission and/or fees at any time, at their discretion.
Recommendation 3: Introduce regulatory changes to ensure consumers can distinguish between independent investment advice and sales driven financial product sales.
Recommendation 4: Regulate and restrict the use of the titles ‘financial planner’ and ‘financial advisor’ (we use these two terms interchangeably).
Recommendation 5: Enforce and review existing disclosure rules regarding the term ‘independent’ and ensure the compulsory full and clear disclosure of all related parties.
Recommendation 6: Increase financial planning education and experience entry standards.
Recommendation 7: Establish a new, overarching Professional Standards Board, with similar powers to standards boards in other professions; membership of which is compulsory.
Quantum's full submission to the PJC can be viewed here.
Quantum's subsequent recommendations
Since we wrote our initial submission to the PJC, Quantum has added two more major recommendations to their industry reform strategy. We show them below.
Additional recommendation 1: Financial planning fees should be tax deductible.
Additional recommendation 2: Financial planners should have an explicit statutory fiduciary responsibility in the Corporations Act.
398 submissions received by the PJC
Of the 398 submissions made to the PJC, only a handful were asked for further comment. Quantum directors will appear at the PJC in the session before the session in which the Commonwealth Bank CEO, Ralph Norris is expected to appear as a witness. Other organisations that have been asked to appear as witnesses include the heads of ASIC, ANZ, FPA, CPA Australia, Treasury, IFSA and the Insurance Council of Australia.
About Quantum
Quantum was established in 1994 by Bill Mackay. Drawing on his extensive skills and experience in the financial services industry, his vision was to create two complimentary divisions within the firm - a Wealth Advisory Business and a Financial Training Business.
Today Quantum Wealth Advisors and Quantum Financial Training are both recognised as industry leaders in their respective fields.
In 2005 Bill's son Tim Mackay joined as Quantum's Chief Operating Officer after a successful career in New York, London and Sydney working with investment banks such as UBS, Deutsche Bank and HSBC across equities, fixed income, derivatives and managed investments. Tim is a qualified Certified Financial Planner, Chartered Accountant - Financial Planning Specialist and has been awarded a Masters of Business Administration from London Business School.
In 2008 Bill's daughter joined Claire Mackay joined Quantum after a successful career in in structured products for both PwC and Macquarie Bank. Claire is a qualified Certified Financial Planner, Chartered Accountant - Financial Planning Specialist and, with her Bachelors and Masters of Laws degrees, has been admitted as a solicitor to the Supreme Court of NSW.