Bernie Ripoll, former Labor MP and director of Map My Plan. Picture: Stuart McEvoy
Bernie Ripoll is known as the father of financial reform. As a labor MP he led the push for Future of Financial Advice reforms in 2013. The former parliamentarian, who runs a financial advice business, Map My Plan, looks at what we’ve learnt from the royal commission.
Is financial advice like good wine — you just can’t do it cheaply?
I think elements of providing quality financial advice that are expensive — face-to-face meetings, getting to know the client — I don’t begrudge that of anyone. The problem is you’re limited by human resources and the time people can spend.
Why is it so important break the nexus between financial product and advice?
It’s conflicted. It’s a sales environment; advice is secondary. It should be 100 per cent about the client, not the product.
What has the royal commission meant for consumers so far? Any real changes?
It’s shocking. It’s surprising how far the misconduct goes. We will see individual advisers will have made mistakes. I don’t want to be pointing the finger, we have a problem with the system and how the system works. It’s from the top down. It’s not just the evidence, it’s the self-admissions. Breaking that is never going to be easy, this is the first step.
Did you think five years after your Future of Financial Advice reforms there would still be half a million super accounts paying trailing commissions?
It’s disappointing that it’s still happening. I acknowledge that this was a difficult transition for the sector and we acknowledged that when we did the original reforms. That’s why we gave it a soft start for the first 12 months. What we’ve found through the royal commission is that the trust that we gave, for the sector to self-regulate, was abused by many.
You regret trusting them then?
That’s what’s been exposed. And I have no doubt in my mind that misconduct would never have stopped if the royal commission hadn’t happened.
And the ABA and other chief opponents — why did they push back? Did they know? Everyone should ask that. They’re still pushing back. My advice would be is: accept the failings and try to improve.
Why did insurance commissions get an exemption in FoFA? Should they be included now?
When we put together FoFA, this was the biggest reform in 30 years. I don’t want to be too simplistic about this, but you can’t fix everything in one day. There’s a whole range of things that we exempted or carved out. My view then and still now is that we don’t want to damage the sector, we want to improve it.
These were big reforms and five years is a short time. Before the ink is dry, I reckon we’re going to be looking down the barrel at a FoFA 2.0.
The move to impose set education standards on advisers seems to have stalled. Is this not an urgent issue? It’s absolutely urgent but it will take time to filter through the sector. There is a great variance between the qualification levels of advisers. We need to find a happy medium where we accept that having a qualification of some sort is important.
Tell us a little bit about your new business, Map My Plan?
The genesis of Map My Plan was really a bunch of people getting together and talking about how can we fix an environment where only 20 per cent of Australians get financial advice. So few people get advice and so many need it.
Paul Feeney, the founder, and myself had been talking about how we break the nexus between financial product and advice. And that’s done through technology, that’s the way we thought everyone would get access to a plan and not be tied to a product. Over two years since I’ve left parliament, we’ve been building a platform. People build their own plan and understand their own finances. We want to help people educate themselves. We use a lot of graphics to help people understand what their financial future looks like.
You can get a sense of financial wellbeing — not about being rich but about how much better can you understand your finances and map out your future.
Life in Canberra must give you quite a different perspective to others in the sector.
Absolutely, you can’t help that. Now that I’m on the other side of the table, it doesn’t mean I’ve changed how I am, or my principles. I’m really excited about the work I’m doing now, and I do go back to Canberra to speak to a range of people very much from the outside. There needs to be a closer and deeper relationship between the sector and the parliament so there’s a better understanding of how the sector works.
What was your first big investment?
Buying my first house.
What are your current personal investments?
They are many and varied (laughs). But my current investments are in businesses that I’m involved in.
By Richard Ferguson
9 June 2018