There is strength in diversity, but there is weakness, too

I am always impressed by the diversity of backgrounds that practitioners within our industry come from. During my career I have worked with people who have come from banking, nursing, journalism, financial markets and sporting backgrounds. Ours is a role that encompasses a broad range of skills, including technical skills, communication skills, relationship skills, organisational ability and an overall empathy with people.

This diversity of backgrounds creates a tapestry of skill sets within our industry, which gives it depth and interest.

Our industry has been very fortunate in that it has experienced significant growth over the past decade. This growth has been due to a number of factors, including legislative changes pertaining to superannuation and increased levels of personal wealth. These changes have led to significantly more Australians seeking professional financial advice.

Alongside this, we have seen the departure of many long-term experienced financial planners who have reached retirement age or who decided the new compliance regimes, which commenced under the Financial Services Reform (FSR) Act, are too difficult to deal with.

Furthermore, it is expected that the next five years will see more long-term, experienced financial planners leaving the industry as they reach retirement age.

There is now a dichotomy in the industry: we have older, experienced practitioners who have maturity to deal with all sorts of clients; and we have younger practitioners who are more highly qualified (degrees/post-graduate qualifications) but who are lacking the maturity and experience to deal with the myriad of client issues that confront an adviser.

A common theme within the industry is its desire to be regarded as a profession. To the credit of the industry this has largely been driven from within. Qualifications and experience of practitioners are an important part of this process.

The Financial Planning Association of Australia (FPA) has actively promoted the CFP (Certified Financial Planner) qualification, but still has a long way to go. Today there are approximately 15,000 planners in this country, of which about 5500 are CFP qualified.

In semester two, 2007, 263 candidates undertook the final CFP subject (CFP 5) and 52.47 per cent successfully completed it. This pass rate has been much the same over the past four years. It would appear that the CFP 5 failure rate is relatively high. What does this reflect? Inadequately prepared or incompetent planners? An exam situation that does not reflect what is actually practised in the industry? Or standards that are way beyond what is actually expected of a planner?

Many planners in the industry are not members of the FPA and are not CFP-qualified, and actively avoid the affiliation.

The reality is that there is a lack of clarity around what qualifications and experience a financial adviser is required to have. The FPA states its aim is to “ensure that FPA membership is something that consumers will automatically demand of their financial planners”. Whilst personally I believe this is admirable and should be encouraged, I cannot recall ever being asked by a customer whether I am a member of the FPA or a CFP.

Along the same lines is the fact that to retain representative status with an AFS (Australian Financial Services) licensee, it is necessary to undertake continuing professional development (CPD) on an ongoing basis.

Whilst we have a lot of which to be proud, including the many and varied backgrounds that we come from, our industry remains fractured and lacking in clarity as to what qualifications and experience a practitioner should have.

Roxanne Gorman is a senior financial planner with a major Australian bank. The views expressed in this column are her own.