Last week AMP upped the ante in the financial planning standards stakes when it announced the launch of an online Master of Financial Planning course. The course commences before the end of this year, and AMP has teamed up with no less than Griffith University, an institution at the forefront of the financial planning education revolution in Australia.
The big four banks and AMP have announced the minimum standards requires of their financial planners, and the dates by which they require those standards to be met.
Financial planners who don’t currently meet the minimum standards announced by their licensees have some decisions to make.
First, and without wishing to sound facetious, do they actually want to measure up at all? It could be a legitimate response, and would certainly be understandable, to decide that the time, effort and cost of complying is simply not worth it.
Time to book a ticket
But if they want to measure up, then it’s time to book a ticket. But there also needs to be some consideration given, in circumstances where planners are given a choice, as to which qualification, standard or designation is most appropriate. It can be confusing.
Educational standards in financial planning are a bit like alternative energy. We kind of all suspect that we can’t continue forever to rely carbon-based fuels to meet our energy needs, but there’s no single, silver-bullet alternative that’s going to fix the problem on its own. It will be a range of alternatives in combination that will sever our reliance on fossil fuels.
In financial planning, we all kind of suspect we can’t continue forever to muddle through with a mish-mash of qualifications and designations, all pitched at different levels and fettered by grandfathering, but education is not a silver bullet for fixing all of the profession’s issues. It will be a range of measures in combination – including education, practice standards, ethics and competency – that will bust open the fossilised structure of the industry.
AQF – a kind of flight number
A good starting point for sorting out the relative hierarchy of education is the Australian qualifications Framework (AQF). The frameworks starts at AQF 1 and ends at AQF 10. While they sound like the prefixes for Qantas flights, in fact they represent a logical escalation of demands and outcomes.
A degree qualification – the minimum entry-level requirement for membership of the Financial Planning Association – is set at AQF 7. As the table below shows, that’s above both a diploma and an advanced diploma; a mater’s degree is AQF 9, and a doctorate (PhD) is AQF 10.
Where it gets potentially tricky for financial planners considering their options is that the AQF, which was introduced in 1995 to make educational standards uniform across the country, only applies to courses of study that are approved and verified.
So a designation like Certified Financial Planner (CFP), or Fellow Chartered Financial Practitioner (FChFP), may claim to be pitched at a certain level – say, equivalent to a master’s degree – and in fact it very well may be, and some courses carry a particular tag, such as a master’s degree; but unless a qualification or designation is actually accredited as such, it’s really just the say-so of the entity that offers the designation.
While financial planners are sorting all of this out, working out which destination they want to get to and the best route to get there, the plane is being readied for take-off. Anyone not checked in will be left in the departure lounge wondering where everyone else has gone.
Australian Qualifications Framework (AQF):
Level 1: Certificate I
Level 2: Certificate II
Level 3: Certificate III
Level 4: Certificate IV
Level 5: Diploma
Example: Diploma of Financial Planning
Level 6: Advanced diploma, associate degree
Example: Advanced Diploma of Financial planning
Level 7: Bachelor degree
Example: Bachelor of Commerce (Financial Planning)
Level 8: Bachelor honours degree, graduate certificate, graduate diploma
Level 9: Master’s degree
Example: Master of Financial Planning
Level 10: Doctoral degree
