The moment members of the Financial Planning Association (FPA) voted to become a professional association, and in doing so, dispense with the organisation's long-standing principal member category, it became a foregone conclusion that the consequences would show up on its balance sheet.
There should therefore have been little surprise last week when the FPA annual report revealed a before-tax deficit of $542,670 for the year ending 30 June 2011.
While the deficit revealed in the annual report was due, in part, to some accounting changes, it has been no secret within the FPA that the changes necessary to become a professional association – the clear-cut separation of financial advice from product – would leave a revenue black hole of sizeable proportions.
Simply put, by opting to dispense with the principal member category, FPA members not only removed something that could be perceived as an obvious link between financial advice and product, they also cut off a lucrative source of revenue.
In many respects, the inevitable revenue shortfall encountered by the FPA must be seen as just a part of the cost of pursuing professionalism and breaking with the conventions of the past. It follows that the organisation must find other ways of sustaining itself that do not conflict with its professional ideals.
This will not be easy in circumstances where, looked at objectively, the FPA is now reliant on the support of its financial planner members – most of whom could best be described as running small to medium-sized businesses.
On all the available evidence, financial planner members of the FPA are willing to support their organisation in pursuing specific projects – something which was evidenced by the money raised via a levy to support the current round of print and television advertising.
However, the FPA knows it must go further than simply relying on membership fees and raising specific levies. It knows it must find sustainable long-term revenue streams via the provision of products and services that meet the needs of its members. This is no easy task when weighed against the attractiveness of the large-scale corporate support of the past.
That the FPA has no shortage of critics is evidenced almost every day in comments posted on Money Management's website, but if the events of 2011 have proved nothing else, they have proved the good sense of financial planners pursuing the ideal of professionalism and eliminating some of the stereotypes of the past.
While financial planners have been right to rail against many elements of the Gillard Government's Future of Financial Advice changes, they also need to recognise the bipartisan political support that exists for a financial planning industry based on professionalism rather than product sales.
They also need to recognise that becoming a profession comes at a price that some might be unwilling to pay.
