'Yes' to financial planner professionalism

With the major institutions and dealer groups having actively encouraged their financial planners to vote ‘yes’ to the Financial Planning Association’s (FPA’s) constitutional changes, the outcome should always have been a foregone conclusion.

At the time of Money Management going to press, there seemed little doubt that the board of the FPA would succeed in getting majority member support for the key changes which it said would result in ‘professional recognition’ for financial planners and restrict membership for individual practitioners only.

The degree to which the big end of town has been backing the FPA changes was evidenced by AMP Limited chief executive, Craig Dunn, who last week told journalists his organisation had been actively encouraging its planners to endorse the direction being proposed by the FPA.

The chief executive of DKN, Phil Butterworth, and the general manager of Professional Investment Services (PIS), Grahame Evans, had earlier indicated their companies were encouraging planners to act similarly.

Allied to this corporate support, the FPA’s strategy has been backed by the Financial Services Council (FSC), while the Association of Financial Advisers (AFA) has been anything but critical of the move. In short, there has been no lack of support for the FPA becoming a professional association.

But as challenging as the campaign around the FPA’s constitutional changes may have been, it is arguable that the organisation’s real challenges will emerge over the next 24 months as it seeks to establish a viable commercial model in a world where the revenues attaching to the principal member category no longer exist.

By becoming an organisation of individual practitioners, the FPA becomes reliant on a constituency dominated by people running small to medium-sized businesses with the hope that the larger players who may have previously been ‘principal members’ will opt to ante up to become ‘professional partners’.

On all the available evidence, most of the big players will, indeed, ante up to become FPA ‘professional partners’ but they will be doing so in the knowledge that they are primarily supporting their planners rather than because they have any voting rights.

It follows that when organisations such as AMP, DKN and PIS are seeking to have their voices heard in Canberra, they will direct their support and their money to an organisation within which they have a vote.

While it can be expected that the FSC and the FPA will agree on many of the major issues to be raised with Canberra, financial planners must accept that the price of professionalism is a diminution of their relative financial muscle.

Big pharmaceutical companies have always had more financial muscle than general practitioners, but this has never diminished the voice of the Australian Medical Association.