In late August a gathering at the Financial Planning Association’s Sydney headquarters was shown the TV ads that the association planned to run, for a five-week period that started on September 18.
Over the previous months, we’d seen rough cuts of the ads as they moved from something conceptual through to a final version. What we saw in August was much more refined and punchier than the early, fairly sketchy ideas.
My opinion is that the ads will do what they’re intended to do, which is to plant in the mind of the public the seed of an idea. The idea is, simply, that if you want professional financial planning services, you need to consult a professional financial planner. I can’t see what is controversial about that. In fact, by definition, you cannot get a professional service from someone who is not a professional.
But to judge from the responses to the advertising campaign, you’d think we’re on the cusp of some sort of civil war. The advertising will create a rift in the industry, between members of the FPA and non-members.
“How dare the FPA pitch one group of financial planners against another”, I hear them saying.
“It’s not the job of the FPA to dispar- age one group of planners for the benefit of another.”
Now, it happens that a central tenet of professionalism is membership of a professional association. A professional association must be set up in a very particular way. There are certain things it must do and it must have in place. If it doesn’t, then it cannot be regarded as a professional association, and its members cannot be regarded as professionals.
It really is incredibly simple. To be a professional, you must belong to a professional association. End of story.
Financial planning in Australia does not yet have a professional association, but one is closer to achieving this status than any other.
Notwithstanding various grandfathering provisions, when the FPA imposes from July 1, 2013, a requirement that all new members must hold appropriate tertiary qualifications, then it will have taken a very significant step towards that goal.
(There is no reason at all why financial planning cannot be served by more than one professional association. It might be healthier if it were. I’m agnostic when it comes to this issue.)
It’s worth remembering that it is not the role of a professional association to promote the interests of its members. It is the role of a professional association to promote the public interest. It’s a fundamental difference, and if you do not understand that instinctively, or if you disagree with it, then you might be in the wrong business.
It’s also worth remembering that be- ing a professional is not meant to be easy. If it were, then there’d be no point to it. It is meant to require dedication and commitment, a subordination of one’s own interests to the client’s – in actions, not just in words – along with adherence to a stringent set of ethics and behavioural principles, and submission to meaningful disciplinary procedures. There’s also an educational component to it all, to first of all get in to the association, and secondly to stay there.
In other words, being a professional should set you apart in a meaningful way from other people, who might engage in broadly the same business, but who have not made the same commitment to the public interest that you have.
Which brings us to the issue of “free riders”. In economic terms, free riders consume resources without paying for those resources. FPA chairman Matthew Rowe uses the example of someone who catches a bus and doesn’t buy a ticket – they’re consuming public transport services without contributing to their upkeep and maintenance.
In financial planning, free riders effectively consume an improvement in public trust and confidence that comes from being regarded as a profession, but without making a full contribution to restoring that trust and confidence by way of committing to actually being a professional.
Rowe is a diplomat. Where he used the term “free riders”, he might have used the term “parasites”. They live off a larger body, or host. The host is those financial planners who are making the honest effort to become truly professional – including belonging to a professional association.
It’s easy to see why such people annoy the living daylights out of Rowe and the FPA, and why they annoy the living daylights out of all professional associations.
When a group of like-minded people voluntarily come together to serve the public interest by forming and maintaining a professional association, it is not fair that others, who have not made such a commitment, also gain – by association, as it were.
Simon Hoyle
simon.hoyle@conexusfinancial.com.au
