Mark Rantall

The Financial Planning Association of Australia (FPA) yesterday rolled out its proposed Education and Professional Standards Framework to the Parliamentary Joint Committee (PJC) Inquiry, as it continues to champion the need to change current education requirements within the financial planning profession.

According to Mark Rantall, CEO of the FPA, the new framework would see the Financial Planning Education Council (FPEC) be gifted to the industry as an independent body that would become the gatekeeper of minimum education standards and requirements for those providing personal financial advice to consumers.

“Now is not the time to reinvent the wheel – we already have a reputable body in FPEC that can uphold the standards set by the profession. Our proposed framework would allow FPEC to do just that for the industry, without being tied to any one association or group,” Mr Rantall said.

The FPA’s proposal would specifically improve financial planner education through a national financial planning curriculum and University audits. This model would then allow professional bodies and the regulators to work together in setting continued professional development, standards and ethics.

Specifically, the FPA proposes:

• A minimum degree qualification plus one year’s relevant experience for new financial planners from 1 January 2018;
• Minimum 90 hours CPD per triennium for all financial planners; and
• A co-regulatory model that recognises professional bodies to maintain and enforce Codes of conduct

“We welcome the opportunity to put our views forward on what the advancement of our profession should look like in terms of minimum degree qualifications to be a financial planner/adviser. We know however that when implementing new standards, it’s important we lead for the future yet respect the past. That is why we have advised introducing an appropriate transition and pathway options for existing advisers, to be completed by 1 January 2019.

“We are committed to working with government, industry bodies, financial planners and consumers to ensure we live up to the expectations of our profession. We want consumers to feel empowered and to realise the benefits of trusted financial advice. This is why it is important for them to know that their financial planner is a member of a professional association; is listed on a public register; is qualified and carries the world class CFP® designation,” Mr Rantall said.

In conclusion, Mr Rantall pointed to recent ASIC enforcement actions to highlight the clear distinction between financial planners who are members of a professional association and those who are not.

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Mark Rantall

The Financial Planning Association of Australia (FPA) yesterday rolled out its proposed Education and Professional Standards Framework to the Parliamentary Joint Committee (PJC) Inquiry, as it continues to champion the need to change current education requirements within the financial planning profession.

According to Mark Rantall, CEO of the FPA, the new framework would see the Financial Planning Education Council (FPEC) be gifted to the industry as an independent body that would become the gatekeeper of minimum education standards and requirements for those providing personal financial advice to consumers.

“Now is not the time to reinvent the wheel – we already have a reputable body in FPEC that can uphold the standards set by the profession. Our proposed framework would allow FPEC to do just that for the industry, without being tied to any one association or group,” Mr Rantall said.

The FPA’s proposal would specifically improve financial planner education through a national financial planning curriculum and University audits. This model would then allow professional bodies and the regulators to work together in setting continued professional development, standards and ethics.

Specifically, the FPA proposes:

• A minimum degree qualification plus one year’s relevant experience for new financial planners from 1 January 2018;
• Minimum 90 hours CPD per triennium for all financial planners; and
• A co-regulatory model that recognises professional bodies to maintain and enforce Codes of conduct

“We welcome the opportunity to put our views forward on what the advancement of our profession should look like in terms of minimum degree qualifications to be a financial planner/adviser. We know however that when implementing new standards, it’s important we lead for the future yet respect the past. That is why we have advised introducing an appropriate transition and pathway options for existing advisers, to be completed by 1 January 2019.

“We are committed to working with government, industry bodies, financial planners and consumers to ensure we live up to the expectations of our profession. We want consumers to feel empowered and to realise the benefits of trusted financial advice. This is why it is important for them to know that their financial planner is a member of a professional association; is listed on a public register; is qualified and carries the world class CFP® designation,” Mr Rantall said.

In conclusion, Mr Rantall pointed to recent ASIC enforcement actions to highlight the clear distinction between financial planners who are members of a professional association and those who are not.

The post FPA rolls out education and professional standards framework to PJC appeared first on AdviserVoice.

Mark Rantall

The Financial Planning Association of Australia (FPA) yesterday responded to the report from the Australian Securities & Investment Commission (ASIC) into the life insurance advice industry.

The report refers to over 200 pieces of insurance advice that have been reviewed by ASIC with the report covering lapse rates and advice quality. The report noted product innovation by insurers and age-based premium increases as some of the drivers behind high lapse rates. The report also raised concerns with training and competency for insurance advisers. This further reinforces the need to raise financial adviser education standards as proposed in the FPA’s submission to the Parliamentary Joint Committee (PJC) Inquiry.

Whilst the FPA is not sure that any of its members have been involved in the advice given, the report reinforces the benefits and need for professional standards such as the FPA Code of professional practice. FPA members are bound by a Code of Professional Practice and as a professional association, the FPA is a firm advocate for higher professional and education standards. Irrespective of remuneration models, FPA members are bound by its Code of Conduct and are held accountable to this. Specifically the FPA can point to Rule 4.10 in the Code that states:

The Member must only make a financial planning recommendation to a client requiring the client to dispose of, cancel, or replace one product or service with another where it is consistent with the requirements in Rule 4.7 and appropriate for the client having regard to any cost, benefit, risks or adverse consequence of:

Any FPA member found to breach rule 4.10 will be subject to the FPA disciplinary process. The FPA has a Life Risk Specialistion (LRS^®), however its disciplinary records show negligible complaints, less than one per year since 2009, made against FPA members relating to life insurance advice.

Mr Rantall stated that “The issues of product design, distribution and embedded product commissions should be looked at by the product manufacturing sector as noted in the recommendations of the report.

“The FPA is focused on advice and we will review the ASIC report and suggested recommendation to review training and the proposed checklist. We are happy to work with other professional associations in the advice space to see how the advice process, guidance or education can be improved.”

“Most financial planners do the right thing and act in their clients’ best interest, providing high quality advice to their clients.”

The FPA submits that many of the issues within the life insurance industry relate to product design, regulatory barriers, pricing, data feeds and public confidence in insurance companies.

Mr Rantall concluded by saying: “We all know that as a nation we are grossly under-insured. Australians need to have appropriate advice on their insurance needs and a professionally qualified financial planner can provide that advice. This recent report should not discourage consumers from turning to a professional for advice – but it does again highlight the need for consumers to turn to a trusted, certified financial planner.”

Andrea Slattery

The SMSF Professionals’ Association of Australia (SPAA) has told a parliamentary inquiry that the education and training requirements for the financial advisory industry need to be radically overhauled.

In 21-page written submission to the Parliamentary Joint Committee on Corporations and Financial Services, SPAA argues that the current system of a minimum standard of education and competencies for financial advisors via ASIC’s Regulatory Guide 146 (RG 146) has failed the industry.

“We believe this (approach) has not succeeded in ensuring that advisors have the competencies required to provide high-quality advice to consumers,” SPAA’s submission says.

“RG 146 is not a flawed concept by itself as it simply outlines the minimum requirements expected by ASIC as a guide to advisors, licensees and education providers. However, too often the industry (licensees and educators) have interpreted the minimum requirements to be all that is required to be competent.

“This compliance-based approach leads to financial advisors being pushed towards a minimum level in a race to the lowest acceptable level rather than increased and improved skills that is the underlying aim of a professional level.”

SPAA CEO/Managing Director Andrea Slattery says the organisation outlined to the parliamentary committee five key steps to establish a profession for financial advice. They are:

• Adequate and appropriate education and experience requirements;
• A co-regulatory approach to regulating financial advice;
• Requiring professional association membership for market participants;
• Maintaining high ethical and professional conduct standards in the financial advice profession that each individual must be personally accountable for;
• Establishing professional remuneration models.

Slattery says by adopting this approach the industry would be embracing a “cultural shift” that embraces professionalism to encourage higher competencies rather than the current compliance driven approach.

“To achieve this outcome what is required is a co-regulatory approach that is more appropriate to lift standards of financial advice through education and training.

“It would allow professional associations to drive professionalism by setting their members higher levels and stringent competency and training requirements.

“ASIC would approve professional associations that can regulate advisors under this framework, replacing the regulator’s need to dictate and be responsible for minimum education standards.”

She says continuing professional development (CPD), as required under RG 146, is a prime example of why SPAA thinks the current system requires radical change.

“The need to undertake CPD is currently driven by a compliance-based approach where advisors are required to undertake a certain amount of CPD over a set period.

“This results in advisors often undertaking training that maintains their current knowledge to just meet the absolute minimum rather than being extended and challenged through new learning and improved knowledge.”

SPAA believes that professional associations should be given the task of setting the CPD requirements for their members.  This would ensure CPD would become more orientated to improving and challenging advisors’ skills rather than being viewed as a mere compliance requirement.”

SPAA’s submission stresses the importance of improving professional, ethical and educational standards in the financial services industry.

Slattery says: “SPAA is adamant that the professionalism within the financial services industry, especially in financial advice, needs to be lifted in order to create a robust industry that can consumers can trust and engage with confidence.

“This is particularly important as Australia shifts to an older demographic where financial advice will be crucial to ensure Australians can retire with dignity and increased self-sufficiency.”

Mark Rantall

The Financial Planning Association of Australia (FPA) continues to champion the need to change current education requirements within the financial planning profession, focusing heavily on this in its recent submission to the Parliamentary Joint Committee (PJC) Inquiry.

According to Mark Rantall, CEO of the FPA, the submission’s focus on increasing minimum education standards and requirements for those providing personal financial advice to consumers is a natural continuation of the aspirational, but achievable recommendations outlined in the FPA 10 Point Plan released earlier this year.

“The PJC Inquiry, designed to examine financial planner education, professional standards and ethics, and recognition of professional bodies, will help advance the profession of financial planning. We welcome the opportunity to put our views forward on what specifically this advancement should look like in terms of minimum degree qualifications to be a financial planner/adviser, recognition of professional bodies and General Advice being re-named ‘general or product information’.

“Australia’s largest institutions have recently stepped up and announced they will be lifting their education standards for the benefit of consumers, and the profession. This in in line with our 10 Point Plan to restore trust in the financial planning profession. Consumers deserve this and more, which is why getting the outcomes of this Inquiry right is important.

“When implementing new standards, it’s important we lead for the future and respect the past. We therefore consider it important to introduce an appropriate transition and pathway options for existing advisers, and an approved degree requirement for new advisers from 1 January 2018.”

“We are committed to working with government, industry bodies, financial planners and consumers to ensure we live up to the expectations of our profession. When all financial planners are members of a professional association, when all financial planners are listed on a public register, when more financial planners carry the world class CFP^® designation, we are in a better position to uphold trust in our industry.”

Mr Rantall pointed to recent ASIC enforcement actions to highlight the clear distinction between financial planners who are members of a professional association and those who are not.

“Our review of data collected since 2009 on ASIC enforcement action concerning individuals in relation to financial advice, shows that FPA members represent significantly less than 5% of the overall ASIC enforcement action each year – even though they represent nearly 50% of financial planners in Australia. From a professional stand-point and in the eyes of consumers, it should be clear then that being a member of a professional body with additional regulatory oversight of professional obligations is an obvious gold standard.”

The FPA’s full submission will be available to media following its publication by the PJC.