The major institutions are right to take the lead on lifting educational standards in the financial planning space.
The chairman of the Financial Planning Association, Matthew Rowe, was absolutely right when he praised AMP Limited for its result-based announcement that it would be lifting educational standards for financial planners working across its licensee network.
The chief executive of the Association of Financial Advisers, Brad Fox, was similarly correct to offer his endorsement.
While there were plenty of cynics who pointed to events at the Commonwealth Bank and Macquarie as having been catalysts for the AMP move, this should not be allowed to diminish the importance of a company which is the nation’s single biggest employer of financial planners making such a move.
In the past two weeks the three largest employers of financial planners – AMP, the Commonwealth Bank and NAB/MLC have committed to higher standards.
Between them, AMP Limited, the Commonwealth Bank and NAB/MLC account for more than 45 per cent of financial planners and both companies have now signalled a progressive lifting of educational standards well beyond the minimum and now somewhat discredited RG 146.
It should follow that if three of the largest employers of financial planners are signing up to higher standards then, with or without legislative or regulatory intervention, these higher standards will become the industry norm and consumers will become the ultimate beneficiaries.
Given that both the FPA and the Association of Financial Advisers strongly endorsed the AMP Limited move and those pursued by the Commonwealth Bank and NAB/MLC, there would seem to be no better time than now for the industry to unite to agree the implementation of a new set of minimum educational standards for financial planners.
It does no one in the industry any good to have major national daily newspapers referencing RG 146 and suggesting that it takes less time to become a qualified financial planner than to become a hairdresser. No matter what the regulatory requirements may currently dictate, the planning industry owes it to itself to move to higher standards and to do so quickly and effectively.
Many highly experienced but possibly under-qualified financial planners have suggested that clients don’t really care about things such as the Certified Financial Planner (CFP) classification, but this is probably less true than was the case three or four years’ ago.
The financial planning industry has been the subject of a highly critical media campaign coupled with intense Parliamentary and regulatory scrutiny. It is therefore inevitable that consumers have become vastly more aware of the planning industry, variability in planner quality and the pitfalls they may encounter if they retain the wrong adviser.
It is in these circumstances that the industry can ill-afford to sit on its hands with respect to educational qualifications and that AMP, NAB/MLC and the Commonwealth Bank have moved to deal with the inevitable.
