The Financial Planning Association of Australia (FPA) has taken a brave stand with its plans to restructure, raise entry standards and promote to the public the benefits of membership. But courage and vision are exactly what’s needed to get the FPA over the line in its transition to professional association.

Mark Rantall, chief executive of the Financial Planning Association of Australia

A line in the sand; a stake in the ground; a milestone; a watershed – whatever cliché you choose to describe it, the Financial Planning Association of Australia’s announcement of a restructuring and a renewed focus on professional qualifications will be seen as a pivotal moment in the development of financial planning as a profession.

It’s a canny move by an association frequently criticised for favouring the big end of town over individual planners, and for an association that has seen a slow but steady migration of members to an alternative representative body, the Association of Financial Advisers.

But it also carries a degree of risk. It has to be supported by members, obviously. It would be an embarrassment and a setback from which the board would struggle to recover if it failed to garner sufficient support from members.

And it will only work if all three elements succeed. If one fails, they all fail.

First, the FPA has to convince its current Principal members to relinquish voting rights and the opportunity for board representation. It must make it clear to individual members that the focus of the association has swung squarely back onto the individual. This in turn puts the onus on individual members to uphold professional standards and modes of behaviour, regardless of what commercial pressures might inform the demands of their employers and licensees.

Second, it must effectively develop tertiary courses and degrees so becoming a financial planer in the first place is only an option for people with appropriate tertiary qualifications. And ongoing educational requirements must be set so it is challenging to remain a member.

And third it must convince the general public that there is a material difference in the quality and standards between FPA members and non-members, and that it is in the public’s interest to seek out FPA members in preference to non-members.

If members don’t believe the FPA is behind them and is pushing only their best interests, then the strategy will fail. If the barriers to entering the profession are not raised, and raised significantly, then the strategy will fail. And if the public doesn’t buy the whole thing, then the strategy will fail.

‘Maybe this is not for everybody, and maybe some Principal members may not transition into Professional Partners’

By reducing the likelihood of the association’s board being stacked with members whose first allegiance is to their employer, rather than to their profession, the interests of individual members have a much better chance of being put ahead of the institutions’.

It’s a brave stand, in many respects. The association is saying to some of the largest financial institutions in the country that “we don’t want your vote and we don’t want you on the board – but we still want your money”.

None of the big institutions that Professional Planner Online has spoken to were prepared to go on the record. Some have queried the timing and some aspects of implementation; but none have criticised the substance of the FPA’s plans.

If one were inclined towards the cynical, one might therefore wonder what benefits institutions see in this restructuring that aren’t immediately clear to everyone else yet.

It may be naïve to believe that the benefit is, in fact, the development of a new, truly independent profession, and that in the long run, the interests of the institutions will be served by greater public trust and confidence in their financial planning businesses. But it’s possible that’s what it is.

The FPA’s chief executive, Mark Rantall, said he is confident the membership structure changes will go ahead, “based on the current member feedback that we have had”.

“But we don’t underestimate the importance of getting that vote up and the importance of members voting,” he said.

“To put some detail around that, the Principal membership category itself needs a 75 per cent majority of the people who vote to make that change happen, in terms of removing Principal membership.

“That’s a high percentage, and that vote won’t take place until April next year, so we’ll work with Principal members over the coming months to talk them through the changes and to make sure they’re feeling comfortable with it.”

Rantall says the move to ditch Principal membership may, perhaps counter-intuitively, see the FPA increase its membership “through being very clear about our purpose, our value proposition, and what we’re there to do”.

“Maybe this is not for everybody, and maybe some Principal members may not transition into Professional Partners, but we actually have an Affiliate category that we can offer them, and my discussions to date would give me a lot of confidence that most of those Principal members will come with us.”

Rantall says the Principal members will no longer be able to vote or sit on the FPA board, but “they will still be able to work with us, they still get to engage with us; they still are able to influence policy – particularly at Government level; and my sense is, from the people I have spoken to, that Principals are also quite passionate about this movement from an industry association to a professional association.

“They can see the commercial benefit for their planners being better educated, compliant, and signing up to a code of ethics, and having a standing in the community that improves consumer trust.

“There’s a broader, bigger agenda for them, to help us move down that path.

“The other thing we’ve got to look at is, we’re quite different to any other profession in the world, in that a financial planner and adviser is inextricably lined to a licence – or our previous Principal membership. And they are linked by way of the Corporations Act. So you can’t disconnect an adviser from their AFSL. We have no intention or desire to do that, so we need to work together on bringing these changes forward.”

Rantall said the distinction between individual members and principal members would be made clearer by the changes, but that there would always be strong links between individual members and their licensees.

“At the end of the day, we’re a professional association, and we’re made up of individual members,” he said.

2 comments on “Webfeature: The courage and vision to get the FPA over the line”
  1. Avatar

    This is not a canny move, this is a con job on individual FPA members.

    Historically FPA policy has not been formulated by member vote, it is formulated by secret FPA committee. If you doubt this then ask yourself who are the members of the latest FOFA Task Force and how were they chosen?

    The committees are dominated by licensee representatives and not by individual practitioner financial planners. This will continue.

    Secondly the domination of product group licensing means that the majority of individual financial planners are not able to offer themselves as FPA board representatives as this risks their employment or licensing arrangements. This will continue.

    The FPA CEO (and former product group executive) thinks you can walk away if you feel conflicted by your product group licensee, the problem with that naive view is that whilst the financial services industry is totally dominated by product groups there is no where else to go except leave the industry!

    So in reality, product group financial planners must remain conflicted to keep their jobs and continue to support their families. This will continue.

  2. Avatar

    This is a positive move by the FPA. Education, Experience and upholding Ethical Principals is the cornerstone of every profession. The title’Financial Planner’ should only be used by those persons who have appropriate tertiary qualifications and industry experience and abide by a professional ethical standard in the interests of their clients.

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