United front needed to create a profession

The financial planning industry will need to unite behind higher educational standards and ethics and reject the noisy dissenters if it is to become a profession, Mike Taylor writes.

As the members of the board of the new Financial Adviser Standards and Ethics Authority (FASEA) go about the task of establishing and then staffing the new body, financial planning groups need to start coming to terms with the realities posed by the emergence of a new industry gatekeeper.

While it is too early to start discussing the fine detail of the new FASEA regime, what should already be apparent to licensees and their financial planners is that from 1 January 2024, permission to use the descriptor “financial planner” and “financial adviser” will be restricted to those who hold an appropriate educational qualification or a recognised equivalent.

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That is why former Premium Wealth Management chief executive, Paul Harding-Davis was right when he told this month’s Money Management Fintech, Platforms and Wraps Conference on the Gold Coast that industry-wide adherence to the educational standards specified by the FASEA would be crucial to turning financial planning into a profession.

He said the industry needed to move to a professional model without dealer groups appointing advisers.

“I think dealer groups should get together and say they’ll never appoint an adviser unless they get a certificate of practice from the FPA [Financial Planning Association], AFA [Association of Financial Advisers], etc,” he said. “We could move to a professional model in that sense.”

Harding-Davis’ comments point not to the situation which exists now or which will evolve through 2018 but to the situation which will likely eventuate beyond 2020 as increasing numbers of appropriately-educated and qualified planners enter the industry and as the necessary limits to grandfathering hasten the exit of others.

The new requirements will commence on 1 January 2019. From this date, new advisers will be required to hold a relevant degree before they are eligible to commence a supervision year and to sit the exam. Existing advisers will have two years, until 1 January 2021, to pass the exam and five years, until 1 January 2024, to reach a standard equivalent to a degree. The Code of Ethics will commence on 1 January 2020, with all advisers being required to adhere to the code from that day forward.

It is in this situation that it will not only fall to groups such as the FPA and the AFA to help with policing educational standards, but to dealer group heads and licensees to ensure that planners working within their businesses meet the necessary requirements.

In such an environment, the financial planning industry could justly point to its equivalence with the legal and accounting sectors and lay claim to being a profession.

However, to arrive at this point, the industry will need to do more than just follow the guidelines which eventually emanate from the FASEA. With the backing of the regulator, it will need to guard against a dilution of standards resulting from the expedient politicking of lesser industry groups and ensure uniformity of approach to the maintenance of the new standard.

The FASEA can only lay down the new educational and ethical standards – it will be up to industry groups and licensees to ensure they are not undermined – something which will undoubtedly give rise to disagreements and the possibility of break-aways.
In the end, unanimity of purpose will be crucial to proving financial planning has become a profession.


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This is a no-brainer. 20 years ago I commenced my Uni study, realising that unless you were well qualified then you would be forced out. However what I didn't expect was the harsh criticism from my colleagues. Now they are trying to play catch up and some have even resorted to short fake courses, even seen an Accountant do a one week course, no exam and then proclaim to all he was a fully qualified Financial Planner too. Bring it on and become a professional adviser. But get rid of Afsl Licensees because this is the problem. License every adviser directly with ASIC. That will see most of the garbage disappear.

Good article. That is a start however believe the following need to also come in before we become a profession:

* No product providers (including Banks, ISA and others) or their subsidiary companies can own/have an AR force or provide advice, including robo-advice or general advice (we all know the loop holes they currently use with these).
* No AFSL structures, each adviser is accountable for them self, and responsible to their professional association
* Various professional associations to replace AFSL's. I.e. life writers would have specific choices compared to a SMSF specialist, which are also different than the holistic planner professional associations etc. Current professional associations to be either disbanded or else forced to change to suit this criteria.
* Demarcation of adviser designations to reflect abilities, education and qualifications (designations not allowed to be owned by any association, like the 'CFP' is owned now, either you're a member or you're not). If you are purely a life writer you have a lower qualification criteria entry level and own designation than If you are a SMSF specialist or a holistic planner etc. (We don't make GP's study the extra amount like a cardio specialist do we? And before I get the typical boring "yes, but they have a degree', come on, seriously we are talking securing 'life insurance', not having someone's life in your hands at stake).
* The professional assoc's cannot be owned or associated with product providers, and are responsible for updating members with compliance info etc, but also for disciplinary action (just like the accounting profession). ASIC's role is of last resort, and their powers/involvement toned down (way, way down).
* All APL's are open or there removed altogether, with PI groups forced to eliminate any reference or such restrictions from their policies.

But as various people have commented in these different articles, nothing as clean as this will come about as there are far too many people with their noses in the trough: ISA, Banks, Product Providers, AFSL's, the Current Assoc's, ASIC, FOS (& its replacement), Unions, and of course the politicans who get 'donations' from either side of the fence.

How refreshing if we had a Gorbachev type figure powerful enough in the mix somewhere to force a revolution?

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