The Financial Planning Association (FPA) needs to shoulder at least some responsibility for the problems associated with regulation and the failure to consult on the part of the Financial Adviser Standards and Ethics Authority (FASEA), according to Queensland-based adviser and managing director of the Investment Collective, David French.
He said that the FPA’s criticism that with less than 50 days to go FASEA had not consulted with one FPA member on the Code of Ethics Guidance was as much a reflection of on the FPA as it was on FASEA.
“The unfortunate thing about the whole regulatory mess is that it stems from a weakness on the part of almost all of the agencies involved in the industry,” French said, also nominating the Australian Securities and Investments Commission (ASIC).
However, he said that instead of representing its members, the FPA seemingly took the view that could improve industry standards from within, not through improving the offerings of financial advisers, but by imposing more and more rules that the FPA was to administer.
French said he was also gobsmacked by the silence of FPA and other member-based organisations in dealing with the situation in circumstances where the fact of the matter was that even if the cost of restitution for wrong-doing was $10 billion, this represented less than four hundredths of 1% of the value of superannuation balances, home loans and asset supporting life insurance policies.
“On that basis we can say that most people who have a home loan, life insurance or who have sought financial advice got whatever they needed and are very likely better off as a result,” he said.
“That is a statistical fact. Why doesn’t the FPA say it.”
French claimed that the FPA was in danger of becoming irrelevant unless it grasped its future purpose, including becoming a lobbying organisation on behalf of its members.
Comments
FPA, ASIC, FASEA, FSC, all guilty and all now irrelevant.
the fpa will be irrelevant as soon as the 2024 education standards kick in. why would anyone with a grad dip in fin plan as well as having passed an ethics exam join the fpa ? they would have attained a higher qualification so there is no need to join the fpa
why would a new entrant do their cfp program; they'd choose to do a fully recognized grad dip instead, for a marginally higher cost, you have 100% assurance it is FASEA recognized (this fact is already evident from the reducing annual revenue from the cfp program -see FPA's 2018 annual report)
they'll remain a member based organisation with vast majority of members who work for the large institutions whom they will represent to government
we need a new association to represent the interest of financial planners
yep, huge drop in revenue from 2018 to 2019 in the cfp program wow.
David French is correct. Since changing from a "membership" organisation to an "industry" one, I do not believe that the Directors have known what it is that the Association stands for or does. As a Member, I do not have a clue and if you question anything, the answers are as bad as the ones any politician gives. Riddles.
Yes, I mean when did this really happen? It was so subtle this change and yet so damaging. I don't recall being asked to vote on it. The leadership from around 2014 seemed to go in with this 'new' face, it really was the beginning of the end. They became a consumer advocate organisation , they may as well now merge with Choice or someone else.
It happened several years ago Bozo. We did vote on it and it was clearly explained by the FPA Directors at the time. In 2019, with the benefit of hindsight, had I foreseen the changes coming, I would have voted against, rather than for the change in direction. I now need an association that represents me, not everyone else as well. Others are possibly the same, which explains why in a matter of a few weeks, the new group on the block has already been reported as having 4,000 members.
Dear Old Fella. A new association with 4,000 members? Wow. Is this real or is it a couple of angry advisers with a mailing list. I can't seem to find any evidence of any actual association and "members" seem to at best be a list of email addresses, at worst a list half full of fictitious email addresses usurped from the recently demised LICG. The very same Life Insurance Customer Group that contained not one consumer and fought with mindless passion to retain commissions. Just because they say they have 4,000 members doesn't make it true. They are the very reason that we have such draconian rules being imposed on all advisers now.
You are clearly not an adviser.
Honor, the reason we have all this on us now is that some of the ones before us just sold stuff and never serviced people, this is fact. The other fact is that when FOFA and Fasea came about the assocations wanted to look like they were on the consumers side and allowed all this crap to be lumped on us. They even wanted to be code monitors to try to stay relevant. Many of those that are still in the associations are there as they cant advise anymore and they hide there, they talk crap at conferences about embracing change , and about getting mental health help, as they have been so gutless their members are basically losing thier livelyhoods ( see amp fpa members that have been terminated) . They dont speak out in public ( has anyone ever heard of the fpa ? I ask every new client and they all say who? ) , as they are hypocrites of the highest order. Bit like your comments, totally uneducated.
Good comments
Dear Mr Taylor
What a disappointing article. Money Management has long been regarded as the thinking persons financial advice magazine and this article does not fit that standard. Quoting Mr French, a random Queensland adviser, does nothing to inform your readers. Mr French would like the FPA to reflect his personal views. So what? Mr French comments about the silence of the FPA which only reinforces the old adage that “there are none so deaf as those that will not hear”. The FPA annual report released last week indicated that the FPA is far from irrelevant based on the membership facts presented there. I do hope Mr French puts more care and attention into what he tells clients and I hope that Money Management returns to its journalistic roots rather than quoting delusional random advisers.
actually. you are wrong. the FPA is fast becoming irrelevant. the numbers don't show that just yet but they are beginning to (see below).
the only reason cfp or afp numbers haven't dropped is because there are huge number of advisers just waiting for the 2024 date to exit. they are only holding membership until then as they don't personally have the education requirement to be able to register with the TPB directly and frankly they aren't going to do the required education on principle, if they are going to exit by 2024.
being a member of a TPB recognized association such as the FPA, alleviates the problem for them in the short term but i'd expect the CFP numbers to drop by 50% after 2024, cfp program revenue has dropped significantly from $2,319 (millions) in 2018 to $1,269 (millions) in 2019 (see page 109 of the FPA's 2019 annual report)
it's only going to get worse, as some other posters have already commented. it doesn't make any sense to belong to the FPA anymore the numbers will tell it acutely post 2024.
the FPA's only solution is to get even cozier with big institutions who will continue to mandate membership of the fpa and fund their existence,which will be just fine as they will be able to continue with their large salaries.
this issue isn't just specific to the financial planning world. it happens in the accounting world too, look at the ca anz, for example, their members are mostly from the big 4 accounting firms, who insist their employees become members of the ca anz, and ca anz almost always spends their advocacy efforts looking after the interest of their masters - the big 4 accounting firms.
that's how big business works. so think carefully before you become a member of the fpa, as to whose interests they are going to be representing.
sorry i forgot to add, if you are really interested read the ca anz submission to the parliamentary review into audit quality which is currently underway here in australia
https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporati...
then also read submissions from the other authors, namely 39, Professor James Gutherie AM, 43 Professor Allan Fels and if that is not enough, and you want to do a really deep dive read "reforming the auditing industry" Prem Sikka et.al (UK)
The crticism of the FPA ignores the secular changes that have confronted the industry. It has been a rear-guard action since the original oFA proposals. The FPA have adapted to these changes as best it could, attempting to establish professionalism ahead of the legislated mandate to do so. If the FPA became primarily a lobby group, they would have diminishing credibility with regulators. As an aside, the CFP accreditation remains a globally recognised benchmark and an effective education program in it's own right. FASEA recognition is but one step in a more meanignful program on ongoing education. CFP, CIMA, CPA, CFA re all worthwhile programs in their own right. Disclosure - I hold no positions within the FPA or any other professional organisation.
@ Yor Onor,
If you think David French's statements are the rantings of one adviser you are completely wrong in your view.
The FPA has failed it's rank and file members way back from when Jo Anne Bloc was the CEO.
Not once has this so -called representative organisation (in name only) set about acting in the best interests of its members and the public unless you think capitulation, acquiescence and putting up a white flag is a more acceptable option.
That's the pathway the FPA has chosen for a long time.
By the way, I am a CFP, I do have an education that was obtained before 2003, and yet here I am, now being told that I have to go back to University again under FASEA because the FPA showed no backbone and stand up for its members !
Dear Aleycat. Thank you for your comments. I wouldn’t suggest that Mr French is the only adviser ranting with no facts to back them up. Just disappointed that Money Management gave him a forum to present such ill informed views. I understand that you share the same views as Mr French but for the life of me can’t understand why you remain a member of something you so obviously think has failed to meet your expectations.
huge numbers will drop off from membership after 2024. they are just their hanging on until then as it helps them meet TPB registration requirements.
Maybe much sooner than 2024. There is currently a review under way into the future role of the TPB. One option being considered is withdrawing TPB from any role in financial adviser regulation. That would make enormous sense given all the other overlapping regulators and rules advisers are now subject to. It would also allow TPB to focus on their real purpose of tax agent regulation.
If that option is adopted, those FPA members who stay on purely for TPB registration benefits could leave straight away.
that's your current 50% of cfp members gone right there.
the others that are hanging around are also only after credits into the grad dip, as soon as their grad dip is done, they too will be gone.
This little black duck may drop off very soon if the TPB get their way.
https://www.moneymanagement.com.au/news/financial-planning/tpb-urges-rem...
Thanks for explaining that. It seems then that advisers are members because it suits them to use the recognition FPA has with the TPB but really they are unhappy with some other element of what the FPA does. It seems to me the evidence is that advisers are prepared to pay the fees and be members in huge numbers currently. Happy to resume the discussion after 2024 to review the forecast exodus.
well, the FPA has used advisers fees for years and years to advance their own self aggrandizement, so why isn't it right for the advisers in question to look after their personal interest. it'll be one of the few things they will have gotten out of the FPA.
you don't have to wait until 2024, just look at the cfp program revenue from 2018 to 2019, you can do the % calculation. it's all there on page 109 of the fpa 2019 annual report.
advisers have already spoken.
best,
V.Smart FP
Its too late for the FPA. They sat doing nothing because they thought they would financially benefit from the new education standards and it backfired on them. They thought code monitoring would be another gravy train but that backfired on them.
The FPA's only hope is for Dante to step aside and get someone strong in to lobby for immediate change but I think its probably too late. Close up the FPA and refund the slush fund to members is probably the best course now.
Dear Anonymous. Did I misunderstand or is it true that if the FPA shut up shop and returned the ‘slush fund’ that 14,000 advisers would not be able to practice because they wouldn’t meet the TPB standards? Aleycat tells me that is why the FPA has so many members. Hard to know what to believe. Certainly some haters but they don’t seem to know why they hate the FPA. Maybe it’s the old tall poppy thing. I remember when we all felt sorry for Apple but now they are big hating them is a thing. Could this be a few struggling uneducated advisers with no clients and lots of spare time just venting at success with no real rhyme or reason. You know, blame someone else for my misfortunes?
You need to be a member of one of the associations to avoid meeting the educational standards. You could join the AFA instead.
Brett. Good to see you haven’t lost your sense of him our!
To be precise they hate the FPA because whilst taking payments from the instos they did not stand up over FOFA, the LIF FASEA etc. They hate the FPA because they were sold a pup with the now useless CFP. They hate the FPA because they saw how successful the mortgage broker associations were at doing the same job the FPA should be doing.
And no the 14,000 advisers could simply join the AFA with the 'slush fund money' as the lesser of two evils until 2024 when they are either qualified or retiring and won't need the AFA either.
Is that clear enough for Dante et el to understand?
It's not a guarantee that meeting the FASEA education standards will also mean you've met the TPB standards. I've just knocked off the FASEA Ethics bridging course and have now met the FASEA education standards but haven't done the required study to meet the TPB standards. It requires specific taxation study which I don't have, so I'll continue to be a member of one of the associations.
you need study in both taxation and commercial law (see below).
18. two tertiary courses in Australian taxation law; and
22. three commercial law units
but they only need to be at AQF 5, a diploma level (19,30). as many have commented before, accountants (not a protected term) have a very low education requirement only a diploma at AQF 5, though the TPB is currently reviewing this. I hope they raise the bar to at least the same as us AQF 8 or higher.
see https://www.tpb.gov.au/educational-qualification-requirements-tax-practi...
Make sure you let them know this each and every time you encounter an accountant (especially if you have a grad dip or masters like me) so they get over the myth of financial planners not having a degree, financial historians need to be told things repeatedly before they understand.
if you think about it, it's probably worth your while to complete the further study required to register with the tpb directly. go to the tax institute and complete it, now this is a membership from where you will learn a great deal that will help you in your professional practice and you won't be beholden to some crappy association like the fpa or afa and you will save money on the annual membership fees and actually have something tangible, a qualification that is recognized within the AQF framework https://www.taxinstitute.com.au/education/programs
Best,
V.Smart FP
Then there's the other group who hate the FPA because they devalued the CFP for everyone by giving it to "grandfathered" old lifeys with minimal education. They hate the FPA because they cruelled any chance of a professional association (rather than a govt regulator) performing a disciplinary role, by going soft on Manny Cassimatis, Sam Henderson et al. They hate the FPA because they claim to be free of corporate influence by not allowing corporate members, yet still allow backdoor corporate influence through the "Professional Practice" program and corporate payment of AR member fees.
Basically the old guard hates the FPA for moving too far towards a professional association. The new guard hates them for not moving far enough, quickly enough. The FPA is trying to appease too many opposing factions and is ultimately alienating everyone.
The FPA thought about the benefits of a professional association but decided to remain an industry association. Today, due to payments from product providers they are only a service body. In return for $1,000 membership you get TASA membership & free scones at an annual conference and the odd email from them. What a waste of money. With over $10 million in cash, it's best if members call the body to be wound up, at the next AGM, take the cash, join another association that will send a message to the remaining industry bodies. The CEO needs to resign full stop.
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