Paul Barrett says the industry is getting its message across about the value of advice, and is starting to attract high-calibre recruits.
I have been encouraged recently by signs that our messages about the value of financial advice are being understood.
This has been demonstrated most clearly by the recommendation of the Cooper Review to make advice a compulsory element of MySuper, and by Minister Bowen’s statement that “longer term challenges such as the ageing of the population, as well as recent events such as the global financial crisis, underscore the need for quality advice”.
Furthermore, in a paper prepared for the Institute of Actuaries of Australia, Andrew McKee stated that the “combination of complexity and materiality generates demand for advice, and therefore ensures that financial advisers are, and will remain, a crucial and valuable ‘lynchpin’ in the financial services market”.
It is important that we persevere with the message so that consumers understand the value of advice, and more choose to access it.
It is becoming increasingly clear that we also need to promote the value of advice to graduates and those choosing careers. The paths that most advisers followed into planning are no longer available. The future supply of financial planners needs to be attended to now, as barriers to entry continue to rise as planning progresses to professionalism.
Minimum standards of education are a good example. The FPA have suggested that by 2015, all new entrants who wish to become financial planners have as a minimum a tertiary qualification in financial planning. Furthermore, they suggest that by 2012 all newly qualified professional financial planners should undertake at least one year of full-time supervised work in client-facing activity before being able to hold themselves out as a financial planner. Whilst only recommendations at this stage, they represent a substantial increase in complexity and time required, compared to the obligations under RG146.
Consequently, we need to ensure that potential candidates are motivated to begin the journey now. Financial planning, unlike the accounting profession, currently lacks a clear career path.
In addition, the nature of financial planning is changing. The client relationship is changing from one where planners provide information to one in which they must convey understanding. The measures of quality advice are moving from process and documentation to comprehension, delivering engaged investors who understand their financial situation and the content of their plan.
Finally, there seems little doubt that future financial planners will be subject to a more onerous legislative environment, including the potential for regulatory intervention in relation to remuneration.
The FPA, via the Future Financial Planner Council, is aware of these pressures and is active in promoting financial planning as a career. Last year we launched a blog site to uncover what a career in financial planning is all about, targeting those studying courses related to financial planning.
Kane Piper was appointed as our “blog star”. He regularly posts interviews with leading personalities from the planning world and blogs about his experiences and interactions with planners. Also included in the website are financial planning job opportunities and upcoming events. Visit the site at http://www.iplan2.com.au/index.html.
Incorporated in the site is a guide to becoming a financial planner. This guide points out that financial planners can make a difference and empower people; financial planning is a career that provides tremendous variety, and is well rewarded and remunerated. It also outlines potential career paths from administrator to business owner or senior manager.
As the value of advice becomes more widely recognised, we must make certain we promote financial planning as a career, ensuring that the quality and quantity of planners is sufficient to meet demand.
Paul Barrett is general manager of advice business for Colonial First State.