“We sort of had all the right ingredients but something wasn’t quite working.”
Sanders says the traditional academic view of professions is that the individuals within the profession have met specific standards of competence and act in a professional manner; that there is an organisation that exists with the capacity to channel that professionalism; and lastly, there is Government support for the legitimisation of the profession.
“If we go back into the dim dark history of time, these are the three key issues.
“Now, when I came on board to the FPA, we had all these ingredients where we had all the structures and components…but the cake just wasn’t rising. There was something missing in the process.”
Sanders says he’s spent the past few years building the FPA’s structure properly, but even after setting higher standards of codes and regulations, “still the cake wasn’t coming out right”.
‘Fail any of them, you don’t have a professional association. Fundamental, unequivocal, end of story.’
His research, including member projects and feedback, resulted in the creation of a “bigger picture of professionalisation” model, which acknowledges that a professional association is just an aspect of an all-encompassing outlook for the whole profession.
“My argument was that the cake didn’t rise because you need a wider perspective,” Sanders says.
“If you’re talking about professional associations, the point is, that’s one dimension of the profession; one dimension of whether you have, in fact, professional enlightenment.”
The findings sit within an internal/external, individual/collective framework, according to Sanders.
“Ticking all these boxes is necessary for a modern profession to be born,” he says.
“And I emphasise, a modern profession – not [like] traditional professions who’ve had hundreds of years. Modern professions have a harder battle to fight.
“Accounting is a classic example. Accounting wasn’t born and isn’t a profession because the public necessarily trusts accountants; it’s actually the fact that they’ve worked through a number of these issues over a longer period of time.”
The FPA is using the UK’s Financial Services Authority (FSA) “10 Commandments” to define a professional association. This is the model they are putting to the Australian Government.
“Basically they did a great job of coming up with the 10 Commandments of what is a genuine, recognised professional body,” Sanders says. “I’m talking about a community-wide professional acceptance – so these 10 things are mandatory.
“Fail any of them, you don’t have a professional association. Fundamental, unequivocal, end of story.
“[This] is why if you mention any other association in financial services, they’re not a professional association. There’s plenty of other groups out there that attach the word ‘profession’ to their name, but don’t have any of these.”
WHAT AM I PAYING FOR?
From a member perspective, there should be numerous benefits of joining a professional association in return for the membership fees they elect to pay each year.
Klipin says: “When people make that active decision to spend the money, it means they are signing up for a code, they’re signing up to a place where they belong, they’re signing up to an education framework and pathway and they sign up to a place where they can learn and develop their professional career.
“That’s really the essence in a sense – a value proposition that bodies have to deliver. And every year when you send your membership renewal, people are making active decisions on that,” he says.
Sanders says that while financial planners are subject to Government and licensee rules,“what being a professional means and being a member of a professional body [means] is that you have other sets of tools available to you – about what is acceptable, what is appropriate”.
“It also gives you tools to negotiate those issues then with the licensees – so real regulatory rules attached to it,” he says.
“There are also professional confidence issues attached to it because people need to know that they are competent and they are different. That builds their confidence and communicates that confidence.
“And membership fees communicate that you are a professional,” he says.
“That’s worth more than 800 bucks. It’s a significant deal in the eyes of the community.”
The FPA admits that until recently it hardly had any community aspect at all.
“I actually think that’s something that we’ve failed to do,” Sanders says.
He says financial advisers who do not feel like they genuinely belong to a community have a mindset of, “I know what I’m competent at doing, I know that the people I’m employed with are doing what I want them to do, but I just don’t know what’s going on over there in those other businesses and I don’t trust them”.
A consequence of this is that “everyone’s built themselves their own brands – personal, licensee, business, all these different brands – so they’ve begun to shrink their confidence just to their own brand”, he says.
As part of its strategy, the FPA is working hard to correct this significant failure.
WORKING WITH GOVERNMENT
With the release of the draft Future of Financial Advice (FOFA) legislation due soon, the true position of the Government in relation to how it views the financial advice profession will be made clear.
When the Government legitimises a profession, that’s a fundamental factor in validating its existence.
Sanders says at this point in time, the profession of financial planning is in dire need of that support.
“The Government keeps talking about the idea that they like advice, and support advice, and they all want to contribute to the professionalism of advice,” he says.
