After the months and weeks leading up to it, the extraordinary general meeting of the Financial Planning Association of Australia (FPA) in Melbourne on April 7 seemed a bit of an anti-climax.
With hindsight, and a glass or two of red wine, that started to feel like a ridiculous response. It became clear over dinner in the hours that followed that what we had actually witnessed – and Professional Planner was the only publication present, let it be said – was actually quite momentous.
It happened quietly, it was entirely orderly, and it was wholly revolutionary. When FPA chairman Matthew Rowe revealed that, including the votes of those present at the meeting, more than 94 per cent of FPA members had voted to restructure the FPA to give it a clear focus on individual practitioners – and that more than 3800 members had voted – the future suddenly shifted.
If we were living in an Arnold Schwarzenegger movie, then all those financial planner terminators sent back from the future to disrupt the vote and protect the conflicted world of financial planning would have suddenly vanished into thin air – because the effect of this vote will be to make it much more difficult for bad financial planners to exist in future.
I say it will be difficult, but it won’t be impossible. A restructured FPA won’t be enough on its own to stop those who really want to do the wrong thing. But it is an absolutely essential development.
One of the reasons the superannuation system is so mystifyingly complex is because governments over the years have been unable to resist the urge to tinker with it, but have, correctly, refused to make most changes retrospective. We therefore have a large number of transitional rules and arrangements that can make it very difficult to give a straight answer to what might seem like a straightforward question.
But it’s an interesting exercise to cast your mind forward, past the transitional dates and periods, to try to see what the system looks like for someone who enters it when these transitional arrangements have passed. I’ve seen just such a presentation, and I have to say the future looks a lot simpler than the present.
The current state of financial planning is a bit like that. We’ve got the structure of the FPA sorted out, so for the first time we have something that can lay claim to being a true professional association; but now it has a transition period of its own during which it will be rejigged and simplified.
The FPA’s plan for developing better educational standards will take some time to come to fruition. These standards will apply to gaining membership of the FPA itself, but there’s also work underway with tertiary institutions to develop course material with a specific focus on financial planning.
Eventually we’re likely to see courses specialising in financial planning. This, too, will all take time. And we have the Future of Financial Advice (FoFA) reforms coming down the pipeline, presumably with its own set of transitional arrangements.
So for some time, we’re going to have a slightly confused and confusing picture of what financial planning actually is, how it works, who can get into it (and stay in it) and how it’s governed.
That’s a situation we have to live with; the alternative is completely impractical and would run the risk of killing the industry stone dead.
There’s one crucial step missing, though. I’ve said on these pages before that one yardstick I apply to the education and experience entry criteria for the industry is that if I can set myself up and work as a planner, then the barriers are simply too low.
Even after the FPA members’ vote, I can still operate as a financial planner. I just can’t become a member of the FPA. So there needs to be some recognition – formal recognition, that is, by the Government and the regulators – that membership of the FPA counts for something substantial. You should have to be a member of a properly constituted professional association, with all the duties and obligations that entails, to be allowed to call yourself a financial planner. It need not only be the FPA, incidentally. Any organisation prepared to put in the structure and the systems necessary to create such an association can do so.
Rowe, understandably, suggested after the vote that from April 7, 2011, financial planning should no longer be referred to as an industry, but as a profession. I congratulate Rowe, the FPA’s chief executive, Mark Rantall, its board, its staff and all those who have served before them – particularly Julie Berry and Jo-Anne Bloch – for getting the FPA to where it is now.
But with all due respect: not so fast!
There’s a few more pieces yet that have to come together to complete the puzzle. They are coming. We can see many of them, and we have some idea of how they fit together. Arguably, one of the most important pieces is now in place.
But only once we have the complete picture, and all transitional periods have passed, can we really discuss how it is that we characterise this thing we call financial planning.
Simon Hoyle
simon.hoyle@conexusfinancial.com.au
