Apart from European debt crises and world market doldrums, it’s been a big year for financial planning in Australia.
The ongoing Future of Financial Advice legislation plus the FPA’s landmark vote at the Extraordinary General Meeting validating the changes to push financial planning toward being recognised as a profession have made for a busy year of change.
Legislation and the economic/market issues will always be with financial planners, but opportunities to get the right settings for a group of service providers to be recognised as a profession by the community at large, are rare. It’s a big ask with no guarantee of success for the FPA and some might well ask the question: Is it really necessary for financial planners to be recognised as professionals? Why is this so important?
To be quite blunt – yes it’s vitally important. There are two things people stress most over – their health and their money. Thankfully the medical profession has come a long way since medieval times when barbers performed surgery and tooth extraction for customers…“Would you like a bloodletting leech with that haircut?”
While it took hundreds of years for the medicos to implement rigorous education and experiential pre-requisites, it nevertheless built a profession which, by and large, is trusted. In Australia, financial planning is cranking up the professional requisites in a much shorter timeframe but as quick as that push has been in an historical context, it’s not before time. The changes being implemented from July 2012 by the Financial Planning Association (FPA) are a vital step to, over time, restore some credibility to the damaged ‘financial planner’ brand in this country.
Change and pain go hand in hand – it’s a given – and regrettably some people in the financial planning industry won’t make it through. There will be those who are too close to retirement to, understandably, be bothered; those for whom it’s simply a bridge too far, and those who will reject it because it changes life as they know it. Then of course there are those who will relish the change and wonder why it didn’t happen sooner.
In 2011, it really is hard to believe that when financial planning was first ‘imported’ to Australia from the USA in the early 1980s, someone could be laying bricks on a Friday and by the following Tuesday lining up to advise people on how to invest their life savings.
Let’s just hold that thought for a moment – in Australia it’s still possible to do a one week course and become RG 146 compliant – has the law really moved on that far in almost thirty years? Does the current legislation at its most basic level actually provide a lot more protection and comfort for Australian investors? Does the legislation, in isolation, make for a profession?
For as long as I can remember, FPA practitioner membership pre-requisites have always sat well above what the prevailing legislation required; the association has never believed that the legislated minimums were sufficient. But the changes at FPA from July are a big step forward – well beyond an RG146 minimum. And that’s a damn good thing!
But the point with all this is that true professionalism is not something which can be legislated. Quite simply professionalism is cultural not a rigid, voluminous, raft of legislation. In part professionalism is about doing the right thing at all times, and legislation cannot begin to define what that means in every situation – so it’s up to those who want to be the professionals to build the right culture.
In many respects professionalism is something from within – something a person commits to in every aspect of their dealings with clients. That there are education and experiential pre-requisites before being accepted as a professional (by the community) are a given to someone who wants to be recognised as such. For such people, it’s just the way it is – just part of what’s required.
In implementing the changes that will distinctly define the FPA as a professional body from July next year, it is building an environment which will greatly enhance the likelihood of its practicing members being recognised as professionals. Oh, and one more thing. Professionalism and ‘doing the right thing’ is about trust and that’s something you have to earn through deeds and actions.
Disclosure: Ray Griffin served as Chairman of the FPA in 2000. Since holding that position he has publicly criticised and advocated decisions by the association.