Transparency – the buzz word of corporation leadership. Transparency of people’s lives via social media, transparency during the good times, and importantly transparency during the bad times.
But can we handle the truth? Why is transparency so important and what has this change in paradigm done to leadership?
When I look back over the years when I have been most disappointed, it has generally been around a lack of transparency. Someone has done something, generally not a good thing and I have been caught on the back foot trying to navigate out of a bad situation with a limited amount of time. The lack of transparency has been fleeting, I cannot even recall the details around most of the incidents however what I do remember is that I lost a little trust in the person involved. And if the situation ever repeated itself I lost a little more trust until my trust in the individual had evaporated forever.
I think for most of us the link is strong between transparency and trust. Both at an organisational and at the individual level. We are above all still human however and in the current environment with so much change circling around us – the Royal Commission, FASEA, disintermediation – can we really handle transparency?
We talk so much about the upside of transparency, the trust it forms, the bridge it builds. It however has a downside that no one talks about. Transparency can also drive change. If you look at platforms – most of us would use a platform. How many of you were aware before the Royal Commission of the shelf space fees and rebates being paid to platforms by investment managers?
Regardless of whether or not this is a practice the industry supports on a sustainable basis, the shelf space payments themselves are surely not the issue. The lack of disclosure around a practice that distorts flows and bottom line platform financial performance is. What does a platform actually do for the non-transparent money received by some investment managers?
If advisers can be held accountable for no fee for service then surely platforms should be equally held accountable for what is, on the surface, similar behaviour.
So transparency builds trust. Transparency also can ignite change. So if you demand transparency from the platforms you use and you find out there are revenues being received that distort a free market what will you choose? To demand transparency and a change in reporting or that you can’t handle the truth?
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19 February, 2019
Here’s how the regulator will pursue harsher penalties for misconduct.