Advice needs to be defined before it can be counted
Moves to assess the landscape of financial planning should be lauded but, as Jason Spits writes, there needs to be more clarity as to who should populate that landscape.
Counting the number of people providing financial planning advice has been remained a challenge for the sector for some time.
For many years loose estimates have existed and since 1999 Money Management has attempted to at least identify the 100 largest planning groups and count the planners operating under those licences.
This year's Top 100 survey has continued in that task but for the first time is joined by ‘official numbers' collected by the Australian Securities and Investments Commission (ASIC) via its Financial Adviser Register (FAR).
While the FAR has been welcomed by consumers groups, politicians and mainstream media it has not answered the question of how should a financial planner be defined? Bear in mind no actual legal definition exists and sections of the community and mainstream media grant the title to anyone who works with financial products.
As such ASIC appears to have adopted a wide definition of what makes someone an adviser with an examination of the FAR revealing that stock brokers and accountants have been included among the 22500 names counted as active financial advisers.
While this makes sense as many give financial and investment advice in the course of their business, the inclusion of time-share holiday sales representatives and foreign currency brokers makes less sense. Thankfully these ‘advisers' are in limited quantities — around 1500 names - on the FAR which also includes advisers attached to industry funds, credit unions and mortgage brokers. (The latter are not included unless they are also an adviser.)
While it would be easy to criticise ASIC and its use of term ‘financial adviser' on FAR it is worth remembering the register is in its early stages, having only launched at the end of March. It also uses the term ‘financial adviser' as it is currently defined — or some would argue undefined — by the Federal Government
Moves to establish minimum education and professional standards as well as links to recognised professional associations would restrict those who could call themselves a financial adviser which would be reflected on FAR in due course.
While it is not a perfect tool, and was not designed to count the sector, it is also the only universal tool of its type proving relevant information for all of these practitioners that is readily available to consumers. Given the pressure the planning sector is under half a good register today is still better than a complete great register next year.
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