The president of the Independent Financial Advisers Association of Australia (IFAAA), Daniel Brammall, says his organisation will push for full government recognition as a profession in 2017.
Brammall told the IFAAA Symposium in Brisbane on Friday his industry body will move to launch a formal application with the Professional Standards Council (PSC) for professional recognition.
“We’re not able to say we’re a recognised profession,” he says. “But not a lot is going to happen if we wait for the so-called industry leaders to do something about it.
“What we’re now waiting for is action. I don’t think it’s going to happen if we wait for anyone else to do it.”
Brammall says the IFAAA expects to spend up to $100,000 on its push for professional recognition and said it would not be easy.
The IFAAA’s move comes after Dr Deen Sanders, the chief executive of the Professional Standards Authority, recently told Professional Planner that the rules around being a professional in Australia are clear: adherence to the Professional Standards Act.
“If financial advice wants to be a profession, it has to come under the formal Australian regime for professions and respond to the long-established regulatory obligations,” he said. “Otherwise it’s just theory and fluff.”
Under Australian laws, a profession is formally legislated with a professional standards scheme when it meets the definition and criteria outlined in a professional standards legislation recognised by the Professional Standards Council.
The Councils use a 40-element version to analyse a group’s capacity to be approved for a professional standards scheme, which includes ethics, education, examination/enforcement and entity.
Brammall says the IFAAA’s culture is consistent with those criteria.
He says he’s unsure if any other organisations are looking at a similar move, but he believes it should be on “everyone’s radar”.
Brammall says advisers will derive significant benefits when they operate as a profession, including consumer production with capped claims and resultant lower public indemnity insurance. But also community trust, increased accountability, and professional pride and esteem.
But he says the move is not about increasing market share for independent advisers, but about what’s in the public interest.
Huge benefits
Sanders told the Symposium the industry needs to focus on the huge benefits professionalism will deliver, and he believes the industry is too focused on “avoiding heat” rather than the huge benefits professionalism will deliver advisers.
“The industry [in its move to become a profession] is focused on getting ASIC and the government off their back,” Sanders says.
“It’s focused on getting less media and less heat.
“But it shouldn’t be about regulation and meeting government expectations. That’s not the reward. Becoming a profession is positive and rewarding in itself.”
When the industry becomes a profession it will enjoy community, professional and personal credibility, Sanders says. That will engender advisers – and the broader profession itself – with both purpose and belonging.
In simple terms, it will make advisers proud to tell guests at a BBQ that they’re financial planners.
“The process of becoming a profession is an empowering, positive experience,” he says.
“The reward is the idea of taking pride in your contribution to society; the idea that financial advisers provide a valuable community service that’s the same or equal to the services of a doctor or lawyer; and the ability to be recognised by government and the community as a valuable and positive contributor, and respected for that.”
Sanders says the positive benefits of professional credibility will flow through to greater career opportunities, graduates wanting to work in the industry, and higher consumer engagement.
He says government proposals in the area of professional standards can be a potential stepping-stone to that [a true profession], or “they could be a distraction to that.”
Sanders says that will depend on how industry leadership responds. If they see the government’s proposals as an end point, financial advice will fall short of becoming a true profession and won’t get the big rewards, but if the industry sees the proposals as the beginning of a longer journey, he is very optimistic.
The Symposium, titled ‘The Road to Professionalism’ heard from a raft of speakers on what it means to be a true profession, including representatives from the medical and legal professions.
Ethics are the foundation
Christine Smyth, deputy president for the Queensland Law Society, told the Symposium that ethics are the foundation of a profession. “Without the ability to maintain high ethical standards you have a job. That’s all you have. You don’t have a profession.”
But she encouraged advisers to focus on more than just rules. Smyth says that if “you impose rules you get compliance, but not commitment”.
Sanders told the Symposium that independence is not the definition of a profession. “It’s part of it. One element. The battle for independence is step one in the battle for the future of the profession.”
He says professionalism is about “independence of mind”.
“It’s about independence in a bigger sense; an enhanced sense,” he says.
“I want you [advisers] to be bigger than the Corporations Act definition of independence.”
Robert MC Brown, chairman of the ADF Financial Services Consumer Centre, says his personal opinion is that if the industry is to become a true profession, industry leaders must stop compromising professionalism in the name of being practical.
“It’s unacceptable for professional people to be passive bystanders,” Brown says.
Brown says ethical leadership is challenging and that too often advice industry leaders avoid responsibility by saying “the world is not perfect”, “it’s not my responsibility” and “we’re on a journey and you have to be patient”.
