Point of view: Don’t forget how far we’ve come

Financial planners have taken a lot of criticism recently from some who say we are not moving quickly enough to embrace change.

While there is more to be done, we have come far in a short time. Our profession is more geared to community needs and expectations than is the case in most other countries. Most Financial Planning Association (FPA) members have welcomed the drive to increased professionalism, have recognised the need to change and believe in the contribution they make to the financial wellbeing of Australians.

The extent of change that has already taken place is a fact easily overlooked as we continually focus on the need for higher levels of professionalism, greater transparency, increased consumer confidence in financial planners, and awareness of the value of their advice.

The last two-and-a-half years have seen more far-reaching change in financial planning than at any other time since the early 90s, when the FPA was formed.

It has been a period of reform both for the sector — as it transitioned to and now adjusts to life under the Financial Services Reform Act (FSR) — and for the FPA, as it helped members achieve the levels of professionalism required.

Industry body versus professional association

The FPA has evolved from an industry body to a professional association. It is an important distinction. Professionals have a responsibility to act with integrity and objectivity, to avoid conflicts of interest, to act with due care, skill and diligence, and to preserve confidentiality. The FPA can claim this professionalism on behalf of its members and it is a point of differentiation members have over non-members.

Australians can be confident that by seeking out an FPA member, they are more likely to receive quality advice and high standards of professional service.

Professional achievement

There has been continued strong growth in the number of Certified Financial Planner (CFP) practitioners. The 4,000 practitioners who held the CFP designation at the beginning of 2002 have risen to 5,400 at June 30, 2004. CFP practitioners have the capacity to create the confidence in financial planners that has been lacking in recent years.

The FPA lifts advice and compliance standards for CFP members

From next year, CFP practitioners will be expected to attain higher levels of continuing professional development (measured in CPD points). From 2007, entry to the CFP program will require a degree qualification — further evidence of the FPA’s commitment to lifting standards.

Across the line

The transition to FSR was a major undertaking for the sector and for the FPA. An enormous commitment of resources was made, pre-March 2004, to helping members understand their obligations under the legislation and completing their applications for Australian Financial Services Licences. All those principal members who wished to transition within the new regulatory regime did so. Only 16 chose to opt out or change their business model.

The FPA has been an active and persuasive advocate of member interests. Before and after full transition on March 11, the FPA has championed the interests of practitioner and principal members with government and the regulators, helping to ensure that the regulatory regime is both workable for financial planners and in the best interests of Australian consumers.

Engaging with members

I am encouraged that we have been able to get closer to our members, in large part through the energy and resolution of the FPA’s chief executive officer Kerrie Kelly and her team. We rely on them, especially practitioners, for input to our policy direction, for our credibility as a strong, representative professional association. An association which is in tune with its membership, responsive to their needs, and able to deliver value is an effective one.

A sound base for the future

The FPA’s most serious challenge came early in 2004 with the announcement that a sharp fall in income, resulting principally from rapid changes in the market for education, was going to leave the association with a deficit for the financial year. By employing a strong focus on effective management and rapid remedial action, substantial savings have been made without jeopardising the quality of member services. It has emerged a stronger association.

I look forward to watching the FPA and the financial planning profession grow strongly over the next few years.

Steve Helmich is director, advice based distribution at AMP . He was elected a director of the FPA in 1999 and chair in August 2002. He hands over chairmanship of the association to Kathryn Greiner on November 30, 2004.