Commonwealth Bank’s decision that all of its financial planners – along with their managers and supervisors – must be members of an “approved” industry association is a welcome step.
The announcement, revealed in an email to planners from Marianne Perkovic, CBA’s executive general manager of advice, should prompt a detailed examination of the differences between “industry” associations and “professional” associations. And there is a difference.
In its email to Commonwealth Financial Planning (CFPL) planners, CBA’s language is ambiguous. The bank says it acknowledges “the fundamental role that industry associations play in defining what it means to be a financial planning professional”. (Emphasis added.)
In truth, industry associations play little role in what it means to be a professional. Professional associations, on the other hand, really do play a fundamental role. Knowing the difference between an industry association and a professional association is critical, for a number of reasons.
If you are not a member of a professional association, then you are not truly a professional – by definition. Professional Planner isn’t making this stuff up, and nor is any of this stuff new – it’s been true for centuries. We report and cover these issues regularly. Professional associations have a particular structure, and a distinctive set of aims and obligations. Professions play a specific role in society, and in the occupations from where they draw their members. Industry associations just don’t play the same role.
Industry associations do play an important role in representing the interests of participants in an industry. They can be efficient and effective lobby groups. They can foster a real sense of community and belonging among their own members. But they have little to do with raising professional standards. Professional associations, on the other hand, exist to set and maintain professional standards – standards that comfortably exceed those prescribed by law. And foremost among a professional association’s responsibilities is to serve the public interest.
Commonwealth wants its planners to belong to an industry association, but speaks about financial planning professionals. The terms “industry” and “profession” mean two different things when they’re used to describe associations.
So before making an informed decision, questions that all CFPL financial planners must be able to answer include:
• What is a professional association?
• What characteristics does a professional association have that make it different from an industry association?
• How is it structured?
• Who is eligible to join?
• What does it represent?
To put it bluntly, becoming a member of a real professional association will be beyond some, and perhaps many, of CFPL’s financial planners. The entry-level criteria may be set too high. So while CBA is to be applauded for any steps it takes to raise the standards of its own planners – and to set an example for the financial planners employed by other banks to be judged against – it is not certain that what the bank has in mind is genuine professional status for all its planners.
Just joining an industry association does relatively little, in substantive terms, to raise the professional standards of a financial planner. But if CFPL plans to encourage membership of a professional association – well, now you’re talking.
This piece really cuts to the heart of one of the problems that has plagued financial planning for many years. Practitioners can’t aspire to the benefits of being accepted by the public as a professional without meeting the standards of a true professional – client first attitude, superior technical training and adequate experience. Unfortunately too many bag the criteria established by those seeking to grow professionalism and to build a true professionals’ association. To them I offer an old standard “There are no short cuts to excellence”. To those who find fault in an existing professional association, I advise them to help improve it from within, not to disparage it from the sidelines.