The 2015 Financial Planning Association (FPA) Certified Financial Planner (CFP) Professional of the Year says vertical integration must be abolished so the financial planning industry can truly put its clients’ best interests first.
VISIS Private Wealth founding partner Christopher Smith says a higher minimum requirement for education must make it more difficult for individuals to become qualified to give front-line advice.
Smith says he “can’t believe we ever got here” and that there is an inherent flaw in the current system.
“The problem is that the last generation thought that their bank would look after them, but the major institutions are driven by profits not client outcomes,” Smith says.
“[But] I’m not sure the Government would ever change it because they have pretty strong lobby groups from the big banks, AMP and others.”
Smith (on the right in the picture, with FPA chair Neil Kendall) was awarded top planner for his commitment to professional standards and ethics and says being unaligned with a major institution was a key factor in the win. It allows VISIS to offer financial and product advice without the influence of a major institution or bank.
Validation
Smith says the award is the validation of 16 years of work. The theme of the FPA awards was “Shaping Futures” with Smith saying while the industry was on the right track, more needed to be done to improve its tarnished reputation following major scandals at the banks.
“I believe being ethical and having integrity is the most valuable attributes of an adviser; I’m a bit old school in my approach to life and look to a long-term approach to business.”
Smith will use his raised profile to educate consumers about the pitfalls of vertical integrated systems, as well as lobby for increased minimum education requirements for planners and more stringent professional regulations.
He joins calls by CPA Australia for a framework for professional standards to raise the bar on advice within the industry to become a true profession.
“I think a framework is the right start… as long as it doesn’t get hijacked by special interest groups like big banks and product providers arguing against having diverse knowledge of advice,” he says.
Education is key
Education is a key part of this framework, though not the sole solution. Smith says the absolute minimum for a planner should be an advanced diploma of financial planning with further studying of the CFP Certification his preference. Smith is currently undertaking the CFA.
“It’s almost a disservice if you don’t have the requisite education to give advice,” he says.
“You shouldn’t be able to walk in [as an adviser] with four subjects under your belt that you studied in afternoon while working at other profession.”
He believes planners should be forced to be upfront about skills – if they do not have the education or ability to offer best practice advice in one area, it should not be hidden in a statement of advice or financial services guide.
Looking to the future, Smith says technology including robo-advice will have a largely positive effect on the industry and cut costs for consumers, but would not supercede good adviser/client relationships.
“I don’t think the robot will give a consumer peace of mind or help them sleep at night and I don’t think it will allay their concerns they see in the market and in newspaper everyday.”
