A financial planner is someone who provides personal advice to individuals and small businesses concerning financial strategies and products in areas such as superannuation, investment, insurance and personal financial management.

To practice as a financial planner, an individual must both;

• operate under an Australian Financial Services Licence (AFSL), either as a licensee or as a representative of a licensee, and
• be competent to practice

Australian Financial Services Licence (AFSL)

Licensees may be individuals or companies, so an individual offering financial planning services can choose to:

• apply for a licence either personally or for a company they control, or
• operate as an employee or authorised representative of another licensee. Large institutions such as banks and insurance companies who offer financial planning services hold licences, sometime authorising hundreds of smaller corporate or individual financial planning practices to act as representatives under their licences.

Because of the difficulties and cost of replicating the support available from large licensees and of meeting onerous compliance obligations, new entrants to the profession are usually best advised to begin by acting as an authorised representative. Even large, successful practices often do not find the move to holding a licence justifiable.

Competency

A person is competent if they have either;

• completed a course (or courses) that is listed on ASIC’s training register(see:  http://www.asic.gov.au) or
• been assessed as being competent by an authorised assessor. This second option is only available to people with relevant industry experience.

Note that there are no other options. One consequence is that a person who has relevant industry experience and who has completed training that is not listed on ASIC’s register can opt for assessment and have that training taken into account. A person who does not have industry experience, however, has no option other than to complete courses that are listed on the register, regardless of what other qualifications they may hold.

The courses or assessments which are completed must cover;

• generic knowledge of financial markets and products, and
• specialist knowledge and advisory skills for each of the particular areas (“Content Areas”) in which advice will be provided, such as:
  • Financial planning
  • Securities
  • Managed investments
  • Superannuation
  • Insurance—general and  life

A financial planner will need to complete a course (or courses) which covers all of these areas, while an insurance adviser, for example, will only need to complete a course (or courses) which covers generic knowledge and insurance.

Financial planners who advise in other specialist areas, such as derivatives or foreign exchange, will need to complete courses covering those areas as well.

Some areas, notably direct property, which is covered by State licensing laws, are not covered by RG146. Nevertheless, advice on property based securities such as REITs is caught, as is advice against securities/superannuation etc in favour of property. The production of financial plans that range more broadly than advice that is strictly limited to property also requires authority under an AFS licence and compliance with RG146.

Course standards

In order to be listed on ASIC’s register, courses must be at or beyond the standard required for a Diploma. A Diploma qualification is equivalent to 1/3 of a three year bachelor’s degree; that is, it is equivalent to one year of full time study at a university or TAFE.

BE VERY WARY OF COURSES THAT OFFER UNREALISTICALLY SHORT TIMEFRAMES, EVEN IF THEY APPEAR ON ASIC’S REGISTER. It is not possible to complete a third of a bachelor’s degree in 14 days.

Completion of courses or collections of courses that are listed may entitle the student to a qualification such as the Diploma of Financial Services (Financial Planning) {DFS (FP)} or, in the case of courses listed by universities, degrees.

Note that completion of a Diploma of Financial Services (Financial Planning) or a university degree does not automatically mean that the training requirements have been met. To be effective, the course must;

a.    be listed on ASIC’s register, and

b.     cover each of the Content Areas required. Details of the Content Areas covered are published on the training register by ASIC for each course listed.

Continuing education

When practicing as a financial planner, continuing education will be required by

a.    the law, which requires that individual training plans are prepared by the licensee, and records of training are kept, so that the competency of  each advisor is maintained, updated and developed, and

b.    the AFS licensee and any professional associations, such as the Financial Planning Association of Australia (FPAA), that are joined. These will have explicit rules about the continuing training that they require.

Further study

A popular next step from the entry level Diploma training is to complete the Advanced Diploma of Financial Services (Financial Planning) {ADFS(FP)}. Beyond this, many advisers undertake a Master’s program, complete the FPA’s Certified Financial Planner (CFP) program or undertake specialist study in areas such as self managed superannuation.

CFP

Full details of the FPA’s Certified Financial Planner (CFP) program can be found under the “Education and CPD” tab at www.fpa.asn.au, and this short summary does not pretend to provide all details.
The program comprises 4 units of study and a 5th assessment unit.

1. To commence the first 4 units of the program, a person needs:
   • 1 year’s relevant experience {usually means as an Authorised Representative (AR)},
   • to be a member of the FPA, and
   • to have a finance related degree or an Advanced Diploma (Financial Planning).
2. To enrol in the 5th unit a person needs, in addition:
   • an extra years’ (ie a total of 2 years’) experience.
3. After the study program is successfully completed, to be accepted as a CFP a person needs:
   • yet another year’s (ie total 3 years’) experience.
   • to sign on to a Code of Ethics.
   • an approved finance degree, or alternatively, any degree plus an ADFS(FP).

This means, regarding the education requirements, that:

1. the holder of an ADFS(FP) with no degree can enter and complete the CFP program. They will not be granted CFP status, however, unless at some point they complete a degree of any kind,
2. the holder of a degree that is not finance related will have to complete an ADFS(FP) to start the CFP program. On completion, they will be able to apply for CFP status, and
3. the holder of an approved, finance related degree can go straight into the program and ultimately apply for CFP status. They will not need an ADFS(FP).

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