The Reverend Tim Costello AO 2019 National Conference Patron Address

Presented by Reverend Tim Costello, Patron, SMSF Association at the SMSF Association National Conference 2019 on Wednesday 20 February 2019. 

Last year, in my address to this conference I stated that “We live in interesting times, as the old Chinese curse states.”

Without a doubt that sentiment applies equally well to us today – especially for those working in the financial services sector.

I am sure you all have noted, read and reviewed the Royal Commission report handed down by Kenneth Hayne. A myriad of recommendations were made.

Some of those are straightforward and prima facie sensible, some technical and complex, needing time for understanding and digestion. I am sure you will see these dissected, analysed and evaluated as part of this conference’s program over the coming days.

But amongst the volumes of the report, many recommendations and hundreds of media articles what was evident is that the public, Australian consumers, expect more than what they have been delivered by our financial services sector.

They want honesty, fairness and professionals who place their customers’ needs ahead of their own.

Commissioner Hayne, in the legal style we would expect from a former High Court Judge, concluded that much of the poor behavior has been driven by the “conflict between duty and interest”.

He opined that while our financial laws speak of managing conflicts of interest “experience shows that conflicts between duty and interest can seldom be managed; self‑interest will almost always trump duty.”

For some of us we can see what consumers expect from their financial advisers and what Commissioner Hayne wants is ethical behavior. Fulfilling a duty to clients and acting ethically.

Not just behavior that may meet the specific requirements law, but ethical behavior meaning you are “doing the right thing” by your client.

As I mentioned, being a former judge and a firm believer in the role of the law, Commissioner Hayne doesn’t just want ethics in industry codes or other professional requirements he wants them hard wired into the law.

He believes the law should embody 6 fundamental principles or norms:
• obey the law;
• do not mislead or deceive;
• act fairly;
• provide services that are fit for purpose;
• deliver services with reasonable care and skill; and
• when acting for another, act in the best interests of that other.

To many, these norms could be summed up as “act ethically”.

But for an industry aspiring to be a profession, you should be embracing acting ethically and seeing the good that can come from it.

Last year I spoke of the increasing demand for ethical investment and people wanting to see social good coming from how their wealth is invested.

I challenge you to see the same of acting ethically as a profession. A profession of financial advisers acting with a duty to their clients first and foremost above any other interest.

Like ethical investment there is boundless social good that can come from this.

An ethical profession that is trusted will see more Australians seek and receive financial advice.
This will see a better informed public with a better understanding of their financial needs for retirement.

More Australians will have the chance of a secure and dignified retirement.

Less Australians will need to rely on Government support in retirement, potentially freeing up scare revenue dollars for health, education and other worthy areas.

We can reduce incidences of financial elder abuse.

These are possibilities for an ethical financial advice profession.

Often, we see good people make poor or unethical decisions when the system around them encourages or allows for this. This was seen throughout the behavior revealed by the Royal Commission.

We have heard from your Chair and CEO that the theme of this year’s conference is “strength”. When seeking to create an ethical profession, look to each other. Encourage each other to act in the best interests of clients, putting duty first over your own interests. Leverage strength from each other to do this.

Strength in numbers will bear results. Strength in numbers of advisers acting ethically will lead you all to an ethical and trusted profession which will deliver good for Australians.