When a dam wall bursts, what follows is usually chaos. The wall holding back financial planning standards and qualifications is showing some very major cracks.
At the end of the day higher standards are higher standards, and any moves in that direction are to be applauded – anyone who has read Professional Planner over a long period of time knows that this publication among all others has been at the forefront of calling for standards to be lifted across the board.
But it’s slightly disconcerting that the push to raise standards appears to be led by institutional licensees.
Given the timing and the content of some of the announcements, it all seems to have happened quite quickly in some cases – almost as if the boards of these organisations had finally twigged that they have a potential issue with their financial planning businesses and had better pay some attention.
Pre-emptive
It’s not difficult to take a cynical view of some of this activity as nothing but pre-emptive arse covering – that in looking at Commonwealth Financial Planning (CFPL) and Macquarie Private Wealth, other institutions have concluded that they had better do something now so when the shit hits the fan they’ve got something they can point to. Having made these commitments, the institutions face the task of working out how to implement them and what action they’ll actually take if planners can’t or won’t reach the prescribed standards.
While it’s all being pursued in the name of higher standards and professionalism, this does not look like a professionals-led initiative.
It’s one thing for Big Financial Institution (BFI) to come out and say this is what we are going to impose upon its planners. But imagine what the impact would have been if, instead, the authorised representatives of BFI Financial Planning – or its other licensees – had come out and said: We’ve all got together; we’ve decided this is the minimum standard we want to attain; and we want the backing of out licensee to get us – all of us, and and all new advisers – to that level. And furthermore, our licensee has our full support to take any and all action, including termination, against any of our peers and colleagues who do not measure up.
Immaturity
It’s a measure of the immaturity of financial planning as a fledgling profession and a failure, in many respects, of individual planners to recognise their broader professional responsibility that such a suggestion seems as outlandish as it does.
It’s early days and the rush and chaos of the dam wall bursting will eventually subside. But there is also the issue of the actual qualifications to address. What is beginning to seep through is a jumble of acronyms that while meaningful to the industry, might look impenetrable and confusing to consumers.
Financial planning qualifications were discussed at a recent industry event, and there was clear equivalency drawn between Certified Financial Planner (CFP), Diploma of Financial Planning (DipFP) and Advanced Diploma of financial Planning, Fellow Chartered Financial Planner (FChFP), Master of Financial Planning and even TAFE certification.
About the only thing that can be said about some of those qualifications is that they’re a bit better than the discredited RG146. But how is a consumer to tell which is which, what the difference is between them, which is of a higher standard and which is of a lesser standard?
Broadened
The debate about qualifications and standards needs to be broadened out to include a detailed examination of continuing professional development (CPD) or continuing professional education (CPE).
Any qualification that is a one-off, point-in-time qualification – a university degree is an example – is all well and good, and demonstrates a certain level of competency and expertise attained by its holder. But it does not reflect the ongoing time and effort needed to keep standards high, and to keep professional knowledge and expertise current.
Raising standards is absolutely fundamental to creating a profession but it’s starting to get lost in a mish-mash of competing and unequal standards and qualifications.
And will consumers trust an institution-led initiative more or less than to an initiative clearly led by professional practitioners themselves?
Dear Simon,
I think that the situation is a little more complex than you portray.
There is certainly a desire from the big players to appear to be meeting the standards but equally many of the planners in the larger groups are wanting to see improved standards and making suggestions to management how this can be achieved.
Eventually those planners who do not wish to measure will move on to retirement or into roles with other groups where perhaps less is expected of them, for example a coaching role or a marketing role.
Larger groups have the structure to allow pronouncements on training standards to be made so it is not really unexpected that they should do so.
Mark