As a leader in financial services, and now politics, Senator Jane Hume is a very influential figure in the sector. She talks to Miriam DeLacy about her vision for building financial capability and the role of financial advice in achieving this important outcome for more Australians.

Like anyone working in government in the first half of 2020, Senator Hume has been busier than ever, responding to the health and economic impacts of the COVID-19 crisis. As Assistant Minister for Superannuation, Financial Services and Financial Technology, she has a vital role to play, both in leading the rollout of the Federal Government’s economic stimulus package, and in communicating with the media on many of the measures announced.

“The economic stimulus package announced in response to the COVID-19 crisis has been equivalent to putting together three federal budgets in the space of just five weeks,” says Senator Hume. “It’s been an extraordinary challenge and it’s not over yet. There is still much work to be done to implement these initiatives successfully and smoothly.”

Lessons for future leaders

And just like so many other Australian women, the Senator is also in the midst of balancing time spent on work responsibilities with homeschooling tasks. While it still falls to women to manage these competing priorities in many households, they are doing so successfully if the increasing presence of women in leadership positions is anything to go by. In considering how much has changed since she was working in financial services, the Senator applauds the many women who are making their mark in this traditionally male-dominated sector.

“I’m genuinely pleased to see that the industry has evolved enormously, certainly since I began my time working there,” she says. “I think it’s a wonderful reflection of where we are as women in society, but also a reflection of the many female leaders we’ve seen in the industry. If you look at Sally Loane at the Financial Services Council, Melinda Howes at BT, Debby Blakey at HESTA, Shemara Wikramanayake at Macquarie Bank and Michelle Jablko at ANZ, these are just some of the women who have been trailblazers in the sector.”

“They’ve made such an invaluable contribution and paved the way for others to follow,” she adds. “They remind me of the phrase, ‘If you can’t see it, you can’t be it’ and I think these women, in particular, are very visible and a real beacon for younger women in the industry to follow.”

For any woman working in financial services who aspires to the same level of achievement as these role models, Senator Hume has some powerful words of advice and encouragement.

“Don’t be afraid, don’t get left behind, recognise your own value and get comfortable about having conversations about your worth, talent, capability, and ambitions,” she says. “But I’d also say don’t be too choosy. You need to take opportunities as they arise because you never know where they’re going to lead. There’s this marvellous quote from Sheryl Sandberg the Chief Operating Office for Facebook, ‘If someone offers you a seat on a rocketship don’t ask which one’. So if I can say one thing to women, it’s to have a go.”

The Senator also recognises that while some career opportunities may not pay off, things that don’t go well offer important lessons and chances to adapt our approach. “Not everything you do will be a success and that’s OK,” she says. “The trick is to learn from those failures and to not get bitter, but get better. Sometimes you’ve just got to learn, adjust your thinking and move forward again.”

Why financial capability matters

Balancing the Senator’s positive view on the emergence of strong female leaders, are her concerns about remuneration in financial services. “The financial services sector is still one of the outliers when it comes to the gender pay gap,” she says. “On average women in financial services earn 22.2 per cent less than their male counterparts, and that’s a pay gap well above the national average. Closing the gender pay gap is something that is happening incrementally, and this government has done a lot to reduce it, but there’s still much more that can be done and everyone is responsible for doing their part.

The gender pay gap is just one of many contributors to Australian women being financially disadvantaged, both during their working lives and in retirement. From her leadership positions in both financial services and politics, the Senator is keenly aware of the difficult circumstances women are facing as they seek to create a more secure future.

“We do know that women face a very unique set of challenges,” she says. “We have less time in the workforce and broken work patterns, which leads to income inequality. Divorce hits us much harder, we live longer and we tend to retire with less super. The financial services industry has a vital role to play in focussing on better financial outcomes for women.”

“In particular there is a real opportunity for our industry to support women in their financial capability,” she adds. “We have a role to play in encouraging women to be more invested in their financial future and more engaged with their financial wellbeing. Because we know women will have better quality of life, better economic security and better retirement outcomes when they’re invested in their financial wellbeing. And sometimes that needs to be a slow burn. Confronting anyone with a plethora of decisions that they need to make and concepts they need to understand immediately, can be overwhelming. It needs to be a staged process to help women feel in control of their financial future.”

The Senator sees the financial planning process as being key to building this financial capability and has been heartened to see women entering the profession in greater numbers during recent years. “When I started working in financial services, advice was a male-dominated profession and that seems to have changed over time,” she says. “In the ‘90s and early 2000s there was a real niche needing to be filled for women seeking advice. And there are now many people, not just women, who are more comfortable with a female financial planner.”

Spotlight on financial advice

With the widespread economic impact of COVID-19, the importance of building financial capability among all Australians is growing. Planners are finding they are in demand and although the Senator would wish for this greater engagement with financial advice to come from better circumstances, she sees it as one of the positives to emerge from the crisis.

“It’s vitally important that Australians receive quality financial advice all the time, but especially when they’re under severe financial stress and need to make difficult decisions,” says Senator Hume. “It’s hard to find a silver-lining of the COVID-19 crisis, but if there is one, it’s that people are taking a much greater interest in their financial affairs, they’re looking for advice and that’s very healthy.”

“I think the best example of this has been in the early release of the superannuation program,” she adds. “There has been so much misinformation out there about what taking $10,000 out of your super today means for an individual. People are confused so we’ve been sending as many people as possible to a financial planner in the hope that they will seek rational, professional and sensible advice on whether this is the right solution for them.”

“I think that the COVID-19 crisis has created a new consciousness of financial wellbeing and the need for assistance to navigate a path to a better financial outcome that goes beyond just earning a wage. People are now looking at their superannuation, often for the first time, and saying where is it invested, how is it invested? But for many people it will raise more questions than it does answers and they will be looking for financial advice for guidance. This is why making sure financial advice is affordable and accessible is going to be so important and I know that’s something the FPA have been very focussed on, as is the Government.”

Untangling the regulatory knot

In considering the many barriers that still exist for Australians seeking advice, the Senator takes a historic view of how far the profession has come and how much work is still to be done in shaping a more streamlined and responsive advice offering. “This is an industry that has been through such significant change in the last 30 years,” she says. “It started as a sales culture in the life insurance industry, it has grown up with the compulsory superannuation system and it has now become responsible for the direction for the financial wellbeing of so many Australians. Yet there is still only a small proportion that receive financial advice.”

“Throughout that transition there have been numerous reforms, whether it be to conduct, education standards, ethical behaviours or the way that fees are charged and commissions earned,” she adds. “Those changes have created dislocation throughout and particularly during the last 15 years. Because of that, we’ve tied ourselves up into a Gordian knot of regulation in the financial advice space and at some point we’re going to have to untangle that knot and, from the Government’s perspective, that’s what we want to do.”

“There are so many oversight bodies in financial advice now, it’s ridiculous. Between FASEA, ASIC, industry bodies, licensees, and the Tax Practitioners Board – they all have different and often competing requirements of financial planners and that means they can’t do what they do best, which is establishing a working relationship with an individual and helping them. We have tied ourselves up in regulatory obligation to a point where we are driving customers away, potentially at a time when they need advice most. How we streamline that oversight obligation will be very important and that’s something that we’re working on right now.”

Finding a way through complexity

In the context of COVID-19, many in the financial planning profession and Government have become even more aware of the extent to which regulatory complexity can interfere with delivery of timely advice. While frustrating, the current situation may create greater momentum and appetite for regulatory reform.

“The apparent need for expert guidance around early release of superannuation is a reminder that advice doesn’t have to be holistic all the time and single issue advice is often what people need,” says Senator Hume. “But we need to determine how to fit that into our regime of making sure that we know our client thoroughly, that we’ve mitigated as many risks as possible.”

As an Assistant Minister with Financial Technology as part of her portfolio, the Senator is very encouraged to see the emergence of so many digital tools as part of the solution to this highly complex regulatory problem. “I genuinely think that financial technology is an important part of the puzzle here,” she says. “It’s very encouraging to see established and emerging FinTech’s rolling out more tools to help financial planners do their jobs better and faster.”

“The majority of the advice journey can be automated using technology that’s already available,” she adds. “From information gathering to the drafting of documents, all of these mechanisms can increase the accuracy and efficiency of financial planners’ modelling. Over the last few months I’ve spoken to a number of FinTech software providers based right here in Australian creating their solutions for Australian conditions, from early stage start-ups to established incumbents. I’ve been really impressed by this world-leading capability that we’ve built here in Australia. Breaking down barriers to the use of FinTech solutions by planners is one of my priorities, so we can ensure that their billable time is spent doing what they do best and providing the greatest value to clients.”

A crossroads for the profession

In highlighting the potential for FinTech solutions to support delivery of more affordable, effective financial advice, the Senator speaks to an issue that is central to the FPA’s new policy platform document Affordable Advice, Sustainable Profession. This detailed, comprehensive policy agenda has been welcomed by the Senator as a timely contribution to the very important work of making advice more accessible to a greater number of Australians.

“The Government believes it’s vital for consumers to be able to get quality advice at a lower cost,” says Senator Hume. “We always welcome good ideas that can make better financial advice available to as many Australians as possible and now is a good time for that discussion to take place. The recent COVID-19 crisis has brought into sharp focus the need to develop better strategies to manage financial affairs and to meet life goals. Getting access to the right financial advice is an integral part of that.”

“This is a profession at a crossroads,” she adds. “With increased compliance requirements, higher educational standards, the rapid change in market dynamics with banks leaving the sector – all these changes will require adjustments from individual players, but also from Government and the way we think about what we want in a financial advice sector. The FPA has been working tirelessly to implement much needed change across the profession, and I’ve welcomed that. We have had a very productive working relationship in this first year and I look forward to more constructive discussions as we progress this profession to be all that it can be.”