Sarah Abood

The ‘Women in Financial Planning Mentoring Program’ has been deemed an outstanding success by the mentors and mentees who participated in the initiative, according to the Financial Advice Association Australia (FAAA).

Run by the FAAA through a $2.2 million grant from the Office for Women in the Department of the Prime Minister and Cabinet, the program aimed to support women in financial planning to further their careers by matching eligible women in the financial advice profession seeking guidance and support with more experienced female members.

The first program paired 96 mentors and mentees from February to August 2022, while the second program paired 36 mentors and mentees from March to October this year.

The program included:

• online training and reading materials for mentors to help guide the mentoring relationship
• three webinars attended by mentors and mentees to track progress during the program, and
• monthly contact between mentors and mentees throughout the program.

One mentee said: “This program has honestly changed my career path and helped me to grow and develop so much more than I expected. I got the support that I needed especially from a female financial adviser. I honestly couldn’t recommend the program enough to those who are struggling.”

Another mentee noted of the program: “My mentor has allowed me to develop not only my professional abilities but also my confidence and self-worth. She has provided me with great resources and new perspectives that will help me for years to come.”

Due to a lack of funding, the ‘Women in Financial Planning Mentoring Program’ will be discontinued in 2024.

FAAA chief executive officer Sarah Abood said that the program has been extremely successful, and it is disappointing that it cannot continue next year.

“I have received overwhelmingly positive feedback from both mentors and mentees saying they were glad they participated in the program,” she said.

“With women only accounting for around 22 per cent of financial planners and around 28 per cent of the FAAA membership, initiatives such as this one are incredibly important to encourage more women to not only consider financial advice as a career but also remain in the profession once they are fully qualified.

“As a profession, it is important that we represent the community we serve, and this program shows that demand for female financial advisers is strong. We need more of them coming into our profession to help ensure we have enough advisers to serve the needs of the growing number of Australian consumers seeking advice.”

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Julie Berry

The Future2 Foundation (Future2) has expanded its scope to include members of the Association of Financial Advisers (AFA) and the Self-Managed Super Fund Association (SMSFA) as participants in its charitable activities.

As with the Financial Planning Association (FPA), members of these associations can now nominate their local community causes for the “Make the Difference” grants program, expected to open in August, and have the opportunity to participate in fundraising that impacts locally, on an Australia-wide basis.

In line with this growth, Future2 is also broadening its focus to include all Australians in need rather than just younger Australians, allowing it to make an even bigger difference in the lives of Australians experiencing social, financial or physical hardship.

Julie Berry CFP, chair of Future2, says Future2 is evolving.

“We have been working with FPA members since 2007 to identify and support grassroots, community programs around Australia, helping those experiencing hardship.

“We will now be working with even more financial services professionals, including members of SMSF Association and the AFA.

“We will also continue our partnership with the FPA through the new association, the Financial Advice Association Australia, once the merger of the FPA and AFA has completed.

“We are looking forward to future growth for our foundation – with greater reach comes greater impact. So far, we have supported over 150 local community programs and distributed $1.6 million to these causes.

“It is really rewarding to see the funds raised at work, and exciting to think that we will now have more financial services professionals involved, with the opportunity to make a difference,” Ms Berry says.

In addition, there have been changes to the Future2 board of directors.  Sarah Abood will step down from the board, and Julian Place and Mahjabeen Zaman have also retired from the board.

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Sarah Abood

The FPA continues to hold reservations about the proposed Compensation Scheme of Last Resort (CSLR) and the Financial Accountability Regime (FAR) Legislation, introduced into Parliament yesterday.

“On the good side, an effective CSLR will promote trust in financial advice among consumers – by ensuring that if retail consumers have lost money due to poor advice, there is a compensation mechanism available,” says FPA CEO Sarah Abood. “However the legislation has not changed substantially from previous drafts, and many of the concerns we expressed previously remain.

“Firstly we believe the scope of the scheme needs to be broader, to ensure that consumers are covered for the full range of matters considered by the Australian Financial Complaints Authority (AFCA), including managed investment schemes (MIS). We acknowledge that a review into the regulatory structure of MISs has been announced, and this is a positive step. We are particularly pleased that this review will include a look at the thresholds that determine whether an investor can be treated as ‘wholesale’ or ‘sophisticated’. However this could take some time, while consumers remain unprotected from a major source of harm in the sector.

“Another area of concern remains the ‘moral hazard’ in the complying, efficiently run businesses in our sector effectively having to underwrite the bad actors. We need to ensure there are strong disincentives for companies and their directors to resort to the scheme – otherwise we risk groups allowing their advice entities to go bankrupt (and the profession wearing the costs of consumer compensation), while the group and its directors continue their other profitable activities unscathed. The proposed remedy of cancelling the AFSL of a defaulting entity is little disincentive if it has already been made bankrupt. We would like to see enduring penalties for the related parties, directors and Responsible Managers of the entities resorting to the scheme.

“We are also keen for the overdue review of professional indemnity insurance to be commenced. A properly functioning PI sector would substantially reduce the calls on a CSLR.

“Finally we are concerned about the costs this scheme will impose on our members. We’re very pleased to see that advisers will not be asked to fund compensation for past misdeeds at the outset – however the proposed sector cap of $20m could see levies in the future of over $1,250 per adviser at our current numbers. This is a significant impost on advisers who already face increased costs from the unfrozen ASIC levy, PI premiums and the general increased costs all businesses are facing in the current high inflation environment.

“We will continue to work constructively with the Government, advisers, consumers and other stakeholders to help ensure the scheme can operate effectively and that consumers can have trust in financial advice,” Abood says.

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Sarah Abood

The Financial Planning Association of Australia (FPA) has released new guidance to members about cybersecurity, amid greater pressure on advice firms to protect their business and client data from potential breaches.

Located on the FPA’s member portal, the interactive guide assists members through the basic steps of adding cybersecurity safeguards to their business.

The guide covers topics including:

• why cybersecurity is important,
• regulatory and legal obligations,
• examples of advice-related cybersecurity issues,
• practical mitigation steps, and
• links to additional resources and webinars.

This will be the first in a series of guides on cybersecurity and privacy principles to help members meet both their ethical obligations to protect clients and their regulatory obligations.

“Cyber risks are an imminent threat to businesses, the success of individual financial planning practices, and the security of clients’ financial information,” says FPA Chief Executive Officer, Sarah Abood.

“However, cybersecurity can be overwhelming for many financial planners with confusing software and technology jargon.

“It is therefore critical that the FPA takes the lead in safeguarding advice practices and their sensitive client data. This guide will be a critical first step in helping financial planning firms become more confident in protecting their businesses from cybersecurity threats.”

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Jessica Dean

The Financial Planning Association of Australia (FPA) has announced Jessica Dean of Globe Financial Planning as the newest recipient of the Gwen Fletcher Memorial Award for the Summer semester of 2022.

Named after the late ‘First Lady of Financial Planning’, the award recognises the highest performing student in the CFP Certification Unit (CFP C) for each semester, with demonstrable dedication to providing high-quality financial advice.

Ms Dean is a financial adviser at Globe Financial Planning, based in Perth. She completed a Bachelor’s Degree in Commerce at the University of Western Australia in 2015, and completed a Graduate Diploma of Financial Planning at Kaplan Professional in 2021.

She said she likes how the CFP Certification Program is built around complex problem solving, and that you had to bring together all your experience and everything you’ve learnt and apply it to different situations.

“The CFP program allowed me the flexibility to apply myself to the core purpose of being an adviser, which is to consider the situation of all our clients, assess what are their best options, and write some good advice based on that,” Ms Dean said.

“In my previous study, I was learning from generic examples that didn’t really translate to the real world. What’s great about the CFP program was that the questions and the exams are quite real, nuanced, and complex, which is what human beings are.

“Having undertaken the CFP program has enabled me to really challenge my own ways of thinking and has really prepared me for advising in the real world. Now I feel more ready to think outside the box and handle complex client situations than I did previously.”

Research by CoreData for the FPA found 9 in 10 consumers say they trust a CFP professional to deliver reliable and valuable advice when compared to other professionals.

FPA chief executive officer Sarah Abood congratulated Ms Dean on her win.

“What Jessica has achieved is outstanding. The Gwen Fletcher Award reflects an ongoing dedication to the highest levels of professionalism in financial planning. Gwen was a pioneer in financial planning education and elevated the profession to new heights, and I am confident that Jessica will continue this proud legacy.

“The CFP Certification Program is an integral part of the FPA’s work to bring the financial planning profession forward and assist planners with the skills and confidence to deliver the best quality financial advice to Australians.”

The CFP designation is the largest and best-recognised financial planning designation globally, with more than 213,000 CFP professionals worldwide, an increase of nearly five per cent from last year. It is a symbol of excellence for financial planners around the world who are actively committed through higher education and accountability to adhering to world-class professional and ethical standards. The CFP designation offers financial planning professionals a way to differentiate themselves in the profession.

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Sarah Abood

The Financial Planning Association of Australia (FPA) welcomes the release of the final report by Michelle Levy in the Quality of Advice Review, and has called on the federal government to act on the report as quickly as possible.

Sarah Abood, CEO of the FPA, says it is imperative that the government acts quickly on the report, as the current regulatory framework is complex, hard to understand and costly to comply with.

“Too many Australians are currently unable to access the quality, affordable advice that they need. This is in large part due to the onerous and sometimes contradictory requirements that have been imposed in recent years, and which are acknowledged in the report as not meeting their goals.

“Ms Levy has consulted widely with advisers as part of her review of the law, and it’s clear she has heard the many concerns expressed. She believes, and we agree, that significant changes are needed to the way advice is provided in order to meet the needs of Australian consumers.

“She has also been consistent in recognising that financial advisers and planners are professionals and should be recognised and treated as such under the law, that quality financial advice is important and valuable, and that more Australians must be able to access it.

“We particularly welcome her recommendations on simplifying ongoing fee arrangements and enabling planners to consult and agree with clients how they would like their advice to be delivered.

“The FPA has been working with members for many years on improving ways to deliver advice, including innovative and more client-friendly initiatives such as video Statements of Advice (SOA). We are pleased Ms Levy has come to a similar conclusion about the issues with the current SOA regime.

“These changes would allow financial planners to speed up the advice process and give consumers more relevant information, also offering the real potential to meaningfully reduce the costs involved in providing advice.

“Minister Jones has previously stated that he was looking for ‘quick wins’. We believe that recommendations eight (simplifying ongoing fee consent), nine (removing overly prescriptive requirements on how advice must be presented to clients) and 13.7 (maintaining the ability for clients to choose how they pay for life insurance advice) are quick wins.

“These recommendations are broadly supported across the sector and have the potential to quickly improve consumer outcomes. They will also enable financial advisers and planners to provide advice more quickly and lower the costs involved in doing so.

“There are many other recommendations in the report and we welcome the opportunity to consult with government on these. Our goal is to help ensure consumers can receive high quality financial advice that will secure their financial futures.

“We are hopeful that the changes can be finalised after consultation and legislated with a bi-partisan approach. The previous Coalition government recognised the problems with the current regime and instituted the Quality of Advice Review, selecting Michelle Levy as the reviewer. The current Labor government has also recognised the issues, endorsed the review and its terms of reference, and supported Ms Levy continuing in the role.

“A healthy and trusted financial sector is critical to the Australian economy and to the wellbeing of consumers and we hope that our parliament can come together to make the much-needed changes.

“The FPA looks forward to working with government and the regulators to make the Quality of Advice review a success. We thank Minister Jones for his work in this area and his belief in the future of financial planning,” Ms Abood says.

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The ALRC package of proposals aims to improve navigability of the law and remove duplication under a new legal hierarchy of:

• Principles-based legislation
• Scoping order – consolidated exclusions and exemptions, and
• Thematic rulebooks.

FPA Chief Executive Officer, Sarah Abood, says: “The proposal is in line with FPA’s long-held position that the legal obligations placed on individual financial planning practitioners should be separated from the requirements that apply to AFS licensees and product providers.

“The ongoing dialogue between the ALRC, the FPA and the financial services sector more broadly, continues to be a constructive demonstration of the ALRC’s willingness to understand the excessive burden created by the current regulatory framework on all users of the corporations and financial services laws.”

She says the ALRC’s Review complements the Quality of Advice Review (QAR) led by Michelle Levy, with both reviews considering equally vital and distinct elements of the corporations and financial services laws applicable to the provision of financial advice.

“Financial planners are faced with regulatory duplication created by both the structure of the legislative hierarchy and the obligations contained in the financial advice-related provisions. This significantly and negatively impacts the affordability and accessibility of financial advice for consumers.”

Abood notes that the Corporations Act contains duplicated requirements applying to the individual planner, either directly or via obligations placed on the licensee.

She says that both the ALRC and QAR reviews highlight that duplications in the law exist on two levels:

• unnecessary repetition of identical provisions such as those identified in Interim Report B, and
• specific obligations placed on the same provider through multiple applications of ‘like’ obligations, such as the financial advice requirements on financial planners.

“This duplication is made worse, as the obligations placed on financial planners under the Corporations Act 2001 licensee obligations, and the Financial Planners and Advisers Code of Ethics 2019, are heavily influenced by the licensee and others who often then apply additional requirements to financial planners.”

Abood says the ALRC package of proposals is vital to the success of the recommendations of the Quality of Advice Review.

“The financial planning profession has continued to deal with the impact of this issue in all elements of operating financial advice businesses and providing advice to help clients under the requirements Chapter 7.

“We are keen to see the ALRC prioritising recommendations relating to financial advice in its Final Report to Government, and include its considerations for the implementation of its recommendations and proposed legislative hierarchy by Government, Parliament, and regulators.”

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Sarah Abood

The Financial Planning Association of Australian (FPA) has wrapped up its first in-person Professionals Congress in three years, with over 1,200 delegates attending the two-day event in Sydney last week (22 and 23 November).

Under the theme, ‘Reunite, Reset’, the FPA Professionals Congress hosted a range of sessions designed to help members better understand the issues facing the profession as well as provide practical tools and information enabling them to work more closely with clients and understand their changing needs.  It also celebrated the FPA’s 30^th anniversary.

Sarah Abood, CEO of the FPA, said the most common feedback from members was that they were delighted to be back together after so long.

“At my first Congress as CEO, it was wonderful to feel the energy from having so many members in one room, and experience first-hand the enthusiasm and passion for the profession that they share.  I have attended many smaller member events since I joined the FPA but this was very special.”

Ms Abood said that much of the feedback from members made special mention of the keynote presentation by Professional Andrew Scott from London Business School, which looked at the implications of a lifespan of 100 years becoming the norm.

“A lot of financial planners are grappling with the challenges – and the opportunities – that increasing longevity creates in their work with their clients, financially as well as from a health and wellbeing perspective.

“Another session that generated a high level of interest was with Michelle Levy, chair of the Quality of Advice review, which triggered discussion about the points she raised including how the law governing financial planners needs to change, and the role of ‘general advice’.

“Probably the most contentious proposal amongst planners has been the idea that product issuers would be able to provide simple personal advice in some circumstances.  It has been encouraging to hear Michelle acknowledge this concern, and the concerns of financial planners, and seek to address it in the review.

“We are very supportive of the many changes proposed that will simplify the delivery of advice and reduce the unnecessary red tape and duplicated compliance that currently bogs us all down. It’s encouraging to hear that these proposals remain and are likely to be included in the final paper.”

Ms Abood also congratulated Marisa Broome, former chair of the FPA, who was made a life member of the Association at the Congress.

“Marisa has been a driving force of the FPA for many years, and her recognition as a life member is very well-deserved.

“She was also an integral part of the Congress’s organisation, and its success, and on behalf of the FPA, I thank Marisa for all her hard work.”

The 2023 FPA Professionals Congress will be held in Adelaide on 22-24 November.  The FPA is also planning a number of regional roadshows across Australia in May 2023.

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Now in its tenth year, the FPA Awards recognise individuals and businesses across Australia who deliver the highest standard of professional and trusted advice to consumers. The awards also acknowledge outstanding university students who represent the future of the financial planning profession.

The winner of the FPA CERTIFIED FINANCIAL PLANNER® Professional of the Year Award is Andy Reynolds CFP® of EFS Advice. The award acknowledges Andy’s commitment to the profession, and the care and diligence he shows clients who are going through life altering events.

FPA CEO Sarah Abood said: “Andy’s approach to supporting his clients’ understanding of complex financial issues, especially those clients with cognitive issues, is truly moving.

“Andy really does go above and beyond for his clients and his use of tools such as diagrams and videos to help support clients’ understanding is a practical demonstration of that.

“Andy’s depth of knowledge in his specialty field, and his understanding of both the tangible and intangible impacts of his advice, impressed the judges.

“Further, his advocacy at a grassroots level, including with super funds and lawyers to improve their processes, is to the benefit of his clients and the financial planning profession more broadly,” said Ms Abood.

The winner of the FPA Professional Practice of the Year Award is Alman Partners based in Mackay, QLD. The judges selected Alman Partners based on its clear succession plan, which involved supporting advisers to becoming partners in the practice, and its continued commitment to diversity. The judging panel was also impressed by the in-depth annual audit the practice undertakes to be accredited with the Global Fiduciary Accreditation (currently held by just seven Australian firms).

Lili Hong AFP® from Future Gen Solutions is the winner of the FPA Financial Planner AFP® of the Year Award. The judges commended Lili on her dedication to building a reputable career as a financial planner. As an advocate for the profession and its future, Lili demonstrated dedication to her clients, and assisted those in need while looking for unconventional solutions to help migrants understand Australia’s complex financial services system.

The FPA University Student of the Year Award was awarded to Matthew Kanizay of Deakin University. Matthew was selected by the judges based on his strong understanding of the challenges and opportunities facing the sector. He is a well-rounded student who has participated in a number of extra-curricular activities and demonstrated an ability to connect and develop a skillset as a future financial planner.

The Gwen Fletcher Memorial Award recognises the highest performing student in the final unit of the CFP® Certification Program. Brigitta Hembrow Gersey CFP® from Elston Private Wealth Pty Ltd, is the 2022 Semester One winner of the honorary award named after the late “first lady of financial planning”, Gwen Fletcher.

Ms Abood said: “The CFP® Certification Program is a rigorous program of study, and to win this award is a real achievement.

“Congratulations to Brigitta for her outstanding performance and commitment.

“These awards shine a light on those making a difference to the financial planning profession, the financial services industry and to all Australians.

“On behalf of everyone at the FPA, congratulations to the deserving winners of these awards,” said Ms Abood.

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Andrew Scott

Ever-increasing longevity means that financial planning is more important than ever before, but planners need to take into account a new range of factors when working with their clients, said Professor Andrew Scott during his keynote address at the FPA Professionals Congress on Wednesday 23 November 2022.

His session, RETHINK: The 100 year life, looked at the latest research on longevity, the broader economic, financial and social implications, and what it means for financial advice.

“There is a major shift in human existence underway and we need to find ways to adapt to it – if we don’t, people will age badly,” he said.

“When we talk about longevity, it’s not just that more of us are getting old, but also how old we are getting.  It is a really long run trend and essentially centenarians are now the fastest growing demographic group in the world. In fact, the majority of children born in rich countries today will live to be over 100.

“As a result, whether people like it or not, the chances are that they will live longer than the previous generations, and they need to prepare for this – not just financially but also with their health, relationships, skills and purpose.”

He points out that this certainty of reaching old age is new, and it is inevitable that a longer life means working longer.

“This has significant implications across the board, for governments, corporates, regulators, as well as communities, hospitals, schools, and of course families and individuals.

“Our labour markets are already being driven more and more by people working longer – my own research shows that in the richest G7 industrialised nations, around 85 per cent of employment growth in the past 20 years has come from people aged 50 and above.

“One of the answers being put forward – and we’re seeing this in Australia as well as in the United Kingdom – is raising the retirement age, but that is going to cause its own problems. During the 20^th century, a “three stages of life” approach of education, work, retirement, was established which worked well when life expectancy was 75 years.  But in the 21^st century, when life expectancy will reach 100, this approach will no longer serve.

“Increasingly, retirement is not viewed as a binary solution where people are either working or not working.  Instead, there is a transition – for example, from working five days a week to working four days a week.  What really complicates this is that longevity doesn’t work the same for everyone – this requires diversity in financial planning.

“On one hand, it requires a number of structural issues to be addressed – from financial literacy in schools, to making advice cheaper by addressing the regulatory framework, and democratising access to financial advice.

“It also means changing the way we think about financial planning.  It shouldn’t be just about savings but also about integrating finances and health, maintaining skills, nurturing relationships.

“A key element is understanding risk preferences.  Too many people think of ageing as a process of decline, and they worry about dementia, physical health.  This is understandable, but we tend to underestimate the abilities of older people and our later years.  People’s preferences change as they age and they might not require so much money, so planners need to reassure clients and prepare them for whatever lifestyle they choose.

“The biggest concern about increasing longevity is that people aren’t prepared, and financial planners have a key role to play in that,” he said.

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