As the financial planning industry grapples with how to institute new professional and education standards, Jason Spits examines what mind-set and attitudes new entrants should be bring to a rapidly evolving profession.
Advertisements seeking financial planners typically fit a professional template and outline the usual aspects of the role, the location, the experience required and possibly the salary that goes with the job. However none are likely go into the mindset or dynamics of being a financial planner.
There are few jobs ads seeking to recruit planners that ask whether the potential recruit is prepared to work long hours, engage in life-long education within an profession that will undergo frequent and disruptive regulatory and compliance change, while becoming the trusted go-to person for people seeking unbiased advice about what to do with their money.
And while education will remain at the forefront of good advice and professionalism (see: Education remains cornerstone to professionalism) the starting question for many new, and even current planners should possibly be: who becomes a financial planner and why choose this profession?
Kevin Bailey, a 28-year veteran of the profession, who retired from providing advice at the end of August, believes those who are in the profession and those who wish to enter it do not fit any single archetype but do have the common characteristic of seeking to assist and coach others.
“Financial planners are still human beings with their own biases but are disciplined enough, by their attitude and their training, to eliminate those biases from their thinking and from the advice they provide to clients,” Bailey said.
“The value that comes from their professional relationship is the prevention of silly behaviour by clients while also covering all the bases in area such as estate planning, retirement, risk insurance, tax and even philanthropy.”
The head of Horizons, AMP’s adviser training academy, Amelia Constantinidis also believes that planners vary in their personalities and approaches but does see a common element of persistence and ability to influence in those students entering Horizons.
“By this I mean the ability to show the underlying value of advice and then being able to translate that value into real terms for clients seeking advice,” Constantinidis said.
For some planners, such as Monarch Advisory Group director Tatiana Coulter who has been involved with advice for four years, that comes from personal experience seeing the benefits of advice and the possible risks in not taking action.
Prior to working as an adviser, Coulter was a business development manager with a number of large financial services firms and was able to see planners working with clients and the positive outcomes they were able to achieve.
“Hearing stories from the financial planners that I looked after about how they helped families was really inspirational. Additionally, I noticed through conversation with my peers, family and friends that so many did not have insurance, nor did they think they needed it,” Coulter said.
“I came to realise that there was a huge underinsurance gap just in my circle alone, so I took this next step as an opportunity try to solve this issue one client at a time.”
Constantinidis said this type of reasoning and motivation was important for new entrants to consider and she encouraged those moving into financial planning as a career to be clear on why they wanted to enter the profession.
“Go and see a financial planner. Ask how it works and how they offer value to clients and how they operate as a business and as a professional,” Constantinidis said.
“Also research the regulatory environment and be clear on the nature of change that takes place in the planning sector and the reality of your working life.”
To this Bailey adds that people considering entering financial planning should not be ashamed of what they do, which is the provision of knowledge and expertise.
“We are not in the business of financial planning. We are in the business of being paid for financial planning advice. This has been lost in the purist ideals that are spouted around the industry,” Bailey said.
“The system allows us to be paid for our knowledge and expertise – but we do need to have those first, just like other professions. The great problem of commissions in the past was that it made advice sound like a sales function and that disconnected people from advice.”
State Super Financial Services managing director Michael Monaghan said those entering financial planning now have the opportunity to be involved in its development and evolution into a specialist profession that is becoming more unique and distinct from other advisory professions. According to Monaghan this will be driven by education pathways that diverge from anything else seen to date.
“A career in financial planning advice will be linked to education in the same way as it is in law or medicine. It will be what is required just to get to first base and is morphing the industry and leading to a unique set of characteristics and skills in the sector,” Monaghan said.
“Accountants may argue they can engage in financial advice and there are elements that are copiable but the essentials around investment, regulation and education alone make financial planning advice an unique suite of skills.”
However new entrants into the sector will have an inside running on attaining these skills and working within the changing sector according to Constantinidis.
“New entrants into planning see the current environment as an opportunity to make the sector better by using the updated regulatory environment and new education standards to redefine advice.”
“They don’t know the old world of advice and have only learnt to operate in an environment of fee for service and best interest duties which will shape and build the profession.”
This does not mean that new entrants will have an easy run with both Coulter and Bailey stating they will have to deal with usual challenges of education, ethics and good business practice.
Coulter believes these are opportunities to draw a line between the past and sees “it as a huge opportunity for planners, like myself, to differentiate themselves through good old fashioned client service, and making sure that everything I do, has the clients best interest first and foremost”.
According to Coulter this tone can also be set by deciding on what business a planner wants to set-up and operate.
“I have chosen to build a book and have deliberately not bought a book. I chose this path as I wanted to be in control of the people that I work with. Growing a business from scratch is very challenging but the rewards have been enormous. My clients are buying my value proposition and I am creating my own story with them. It has been a very rewarding experience,” Coulter said.
Bailey said choices like this are critical for planners in deciding how they will be perceived and how they will operate in the long term and encouraged new entrants to begin thinking about these bigger picture issues.
“You cannot be all things to all people so you will have to decide on what type of advice you would like to provide and what type of client you will service. This is not always where the best margins will be but where the allure of financial planning runs strongest,” Bailey said.
Looking back over nearly three decades of advice Bailey said that new entrants should read widely, understand the basics of the market and its dynamics, examine the best advice providers and not be carried away by the hype.
“Don’t believe you can predict the future of markets. It is a prevalent myth but it is not true and even the best fund managers don’t always get it right,” Bailey said.
“Rather you can have influence on clients and the profession, not through returns, but by engaging and working through ideas and issues that affect clients and advice. In this way you can have a voice from early on and throughout your career.”
