Editor’s corner - Politically biased and ethically compromised?

Katie Royals, 02/06/2023

The latest report from the Progressive Advisors Movement and Good Ancestors Project has caused quite a stir in the private wealth industry. This is perhaps unsurprising given it branded the sector as “politically biased and ethically compromised” particularly in its attitudes towards tax. So, is this a fair reflection of the industry?

As an observer of the industry, it does seem true, at least in part. Moreover, when around 100 advisers say there is a problem, it would be wise to assume there is an issue.

It is true that the sector is less tax aggressive in its stance than perhaps it was 10 or 15 years ago, but it is also true that the sector is certainly not tax positive. There also does seem to be a presumption of client values in regards to tax.

Some may argue this is simply the nature of the industry. A lot of wealth planning and structuring revolves around tax, making it difficult for the industry to not have an anti-tax slant.

Others will suggest this is an excuse. I am regularly told by those working in the industry that there is far more to wealth structuring than mitigating tax. So, perhaps it is time for the sector to focus on those other aspects rather than looking to reduce tax bills as much as possible.

The report noted that this desire for change is not just led by the professionals working in it. There are clients that are “tax proud” and actively want to pay more in tax. Currently, many believe the industry is not doing enough to support these clients and, as a result, is delivering a poor service.

Given the sector prides itself on its personal relationships, rectifying this and fully understanding a client’s attitude towards tax should be a top concern.

Of course, it is to be expected there will be some that disagree with the report and its findings. For those individuals, the most damaging option would be to simply dismiss it.

At the very least, I would encourage them to discuss the report with colleagues, clients and other intermediaries. Those that are so confident they are right, surely would not be afraid to do this. The reflections of those they speak to would reinforce their views if indeed they are right.

Of course, there is a chance they would not. Some may have not voiced their concerns previously for fear of going against the norm or may have been worried about losing or alienating clients.

The report may empower them to speak up more and question practices or ask clients for their honest opinions on the matter.

Whether or not this will prove a catalyst for dramatic change remains to be seen. Either way, there seems to be a growing consensus that the industry needs a refresh.

Those that want to help shape this new look should be paying attention now or risk the change occurring while they wait and subsequently being left behind.