The chairman of the Financial Planning Association, Matthew Rowe, says the profession has reached a tipping point. It is time to stop talking about change, and to do what is required to make the change happen.
Four years and four ministers later, Australia’s financial planning profession remains burdened by the deadweight politics of FoFA. The debate has devolved largely into one of ideological self-interest, which is useless and distracts from the ultimate goal of building robust frameworks that underpin renewed confidence amongst consumers and clear legislation that upholds the ultimate and measurable value of professional financial planning and advice.
Practitioners and others in the financial services ecosystem have laboured under four years of uncertainty for themselves, their business operations and their clients.
In parallel, we have seen played out in the media clear evidence of the worst that our broader ecosystem serves up to consumers under the guise of “advice”.
It is time to move on from FoFA. It is time for financial planners to come together behind SoPA – the Separation of Product from Advice.
Step forward
Today, the FPA asks you to step forward. We ask each of you who believes in acting in the client’s best interests, who seeks higher standards that equal those of other respected professions and who desires a profession in financial planning, to step forward.
We ask you to act on your beliefs, mandate this step and cement the definition of professional success as making a positive difference in our client’s lives.
The FPA has spoken in clear and comprehensive language that is unprecedented by any member-based organisation. The FPA has done this in the face of staunch opposition. We have done so because it is simply the right thing to do and simply the right time to do it.
The FPA seeks to move beyond the self-interest of product manufacturers, both retail and industry, that manufacture public campaigns in order to distract from commercial agendas. If you own or represent a superannuation or investment product, it is not surprising that the answer to every problem is more superannuation or investment.
It is time to move beyond those that cause reputational damage to all financial planners through their actions when they should know better and have the resources to do better.
The final straw
The final straw for the FPA was the announcement last week that a major Australian institution did not follow regulatory guidelines allowing clients to seek independent advice regarding compensation.
It is time to change the language of financial planning, in particular those running financial planning organisations, from “product”, “sales”, “compliance” and “distribution”, and to have instead as the new default language “client”, “value”, “quality” and “advice”.
It is time to rally comprehensively behind this movement called professional financial planning to ensure the Australian community understands and trusts the ethical, education and standards-based contribution that adds to, not detracts from, their financial well-being.
It is time to separate advice from product in the corporations law, in our profession, in our value proposition, in the way we operate day-to-day, and in the way we are remunerated for our services.
If we cannot see clearly that we have reached a tipping point for change, what more must happen? When will we stop talking about change and do what is required to become the change we want to see?
A flag on the hill
In the Senate tomorrow the Financial Planning Association will put its SoPA flag on the hill. We will call for:
1. Raising the minimum criteria so that the term financial planner/adviser is restricted under the Corporations Act and the individual must:
a. Have membership of an ASIC approved professional body; and
b. Hold minimum education standards of a relevant university degree, and three years’ experience over a five-year period; and
c. Maintain minimum continuing professional development of 90 CPD points over a triennium.
2. Amending the law to develop criteria so that ASIC can approve professional bodies such as those prescribed in the Tax Agent Services Act or the approach proposed by the FSA in the UK.
3. The immediate establishment of a financial planner education working group (FPEWG) to develop a considered, strategic and holistic financial planner education framework. With the aim of lifting minimum education and experience standards to a relevant university degree and three years experience over a 5-year period.
4. The term “commission” to be defined and then banned under the General Advice exemption.
5. General advice to be re-termed “general or product information” and be limited to the provision of “factual information and/or explanations” relating to financial products.
6. The development and implementation of a co-regulatory design, which recognises and facilitates the role of “approved” professional bodies in assisting ASIC to achieve its consumer protection and confidence mandates.
7. The establishment of a public register which is managed by ASIC, with a requirement for all financial planners/advisers (including employed representatives) who provide personal advice to be individually registered.
8. ASIC to have suspension powers for financial planners/advisers suspected of material and systemic breaches of the best interest duty. ASIC must have a justifiable position and the financial planner/adviser has the right of appeal to the Administrative Appeals Tribunal (AAT).
9. The government, once the Federal Budget position has been improved, to commence consultation with industry to determine the benefit of having the preparation of an initial financial plan be expressly stated to be tax deductible.
10. A review into lifting the criteria of a “sophisticated” investor.
To stand with us you do not have to believe in everything the FPA is doing. We do not profess to have got everything right. We ask you to stand with us because by doing nothing you give tacit approval to the status quo.
The status quo is no longer an option.
Leave a Comment
You must be logged in to post a comment.