"Could". By itself it's a harmless enough word. It's a modal verb, and its use is considered rather polite.

But ask a financial planner what they think of "could" and, if they're honest, they're terrified.

Because the word "could" could bring a lot of them down after January 1.

Why? Let's start with some history.

Thanks to scandal after scandal, which resulted in financial ruin for tens of thousands of Australians (think Storm Financial, think CBA Financial Planning, think Opes Prime, think fees for no service, etc) the financial planning industry has lost control of its future.

New rules

The Government has created the Financial Adviser Standards and Ethics Authority (FASEA), which is now in charge.

And FASEA has the conflicted payments that dominate the industry, and which were the root cause of virtually all the scandals, firmly in its sights.

On January 1, 2020 an industry wide Code of Ethics comes into force.

Standard Three of that Code says, "You must not advise, refer or act in any other manner where you have a conflict of interest or duty."

It sounds clear enough, but just in case financial planners are in any doubt what a conflict is, FASEA has issued some guidance to help them.

This is where that scary word, 'could,' comes in.

"You will breach Standard 3 if a disinterested person, in possession of all the facts, might reasonably conclude that the form of variable income (e.g. brokerage fees, asset based fees or commissions) COULD induce an adviser to act in a manner inconsistent with the best interests of the client or the other provisions of the Code," FASEA states.

Best interests

So, for example, if a financial planner who charges asset-based fees (commissions by another name) advises a client to put money into a managed fund rather than pay off their house, is that planner acting in the client's best interest?

The planner in this case is paid as a percentage of how much the client has invested, and the more that's invested, the more he or she gets.

Paying off the house, in this example, is less money for the planner.

It's the same with brokerage for shares and commissions for insurance.

The bigger the deal, the more the adviser receives, which on the surface, is a clear incentive to sell rather than advise.

Now, in its effort to clean up an industry that has hurt so many people, the Government, through FASEA, has raised the stakes.

Financial planners don't have to act badly to breach the new code of ethics.

There just has to be a chance they could.

Lawyers will grow to love the word "could".

Industry concerns

The Association of Financial Advisers echoes the industry's concerns.

"How do you have confidence that life insurance commissions do not trigger the disinterested person test," the association told the ABC.

"If an adviser owns shares in a company, is there a conflict in recommending a client buy shares in the same company?

"Conflicts are unavoidable, the issue is how you manage them."

According to the corporate regulator, ASIC, Australians don't see it that way.

Forty-nine per cent of people surveyed by ASIC believed financial planners were more interested in making themselves rich than helping their customers.

Thirty-seven per cent said planners did not generally have the customer's best interest at heart.

Views that are making people vote with their wallets.

According to ASIC, only 12 per cent, or less than one-in-eight, had received financial advice in the last 12 months.

Change is coming

However, there is evidence of change.

According to research house Investment Trends, 40 per cent of financial planning industry revenue now comes from fixed fees or hourly rates.

It's a figure that blows out of the water the oft-used argument by those who benefit from conflicted payments that people won't pay up-front for advice.

But the bodies representing financial advisers, like the AFA, the Financial Planning Association, the Financial Services Council and even the accounting lobby groups, are fighting as hard as ever to retain the conflicts.

They, and their members, can't say they haven't been warned though.

The battle to remove the conflicts and turn financial planning into a profession that Australians can trust has been raging for a decade.

That word "could" could be the word that succeeds, where everything else has failed.

Because "could" could finally rid the industry of the practices, and people, who've cause so much harm to so many.