Well, we’re finally on the way! On the path to a profession, that is.

Our bags are packed (we have clear regulations under which to act), we’re just about to board (we have our single dispute-resolution body and regulatory funding model clear) and our ticket is in our hand (FASEA and our new education standards). We’ve asked for an upgrade and based on our impeccable flying record we’re pretty confident. But hold on a minute. We’ve done everything right, why is the guy in the shorts and singlet getting the upgrade?

How is this relevant to where we are with financial advice, you ask?

There’s been much talk about what constitutes a profession. In its simplest form:

  • A profession is a disciplined group of individuals who adhere to ethical standards. This group positions itself as possessing special knowledge and skills in a widely recognised body of learning derived from research, education and training at a high level, and is recognised by the public as such. A profession is also prepared to apply this knowledge and exercise these skills in the interest of others
  • A professional is a member of a profession. Professionals are governed by codes of ethics and profess commitment to competence, integrity and morality, altruism, and the promotion of the public good within their domain of expertise. Professionals are accountable to those served and to society
  • Professionalism comprises personally held beliefs about one’s own conduct as a professional. It’s often linked to the upholding of the principles, laws, ethics and conventions of a profession as a way of practice
  • Professionalisation is the pattern a profession’s development, as well as the process of becoming a profession.

This all sounds good and is obviously applicable to mature industries such as the medical, legal, engineering and accounting professions (recent issues with CPA Australia aside). But in financial advice, we’re not there yet.

To get there, we need take the first steps. But who takes these steps, and what hurdles need to be overcome in doing so? Why aren’t all businesses in the financial advice industry getting ‘upgrades’, meaning, in this context, acknowledgement by the industry as a whole of the hard work undertaken to move their particular business towards the goal of becoming a profession?

What we celebrate tells a story

An industry can be judged by how it celebrates success. After all, reward and recognition in a professional sense is something to be admired, is it not?

A number of prominent industry awards are based on two main criteria: year-on-year growth in numbers of authorised representatives licensed under the AFSL, and adviser satisfaction. For me, this raises fundamental questions about what the industry values in measuring its own performance (and may explain why we haven’t been able to successfully self-regulate).

There are a number of tried-and-true strategies to grow top-line revenue in business; for example, market share can be gained by lowering price or quality. In intermediary businesses such as AFSLs, using a light touch to implement change can also drive short-term growth. But how do these strategies play out in a highly regulated environment such as financial advice? If the cost of service provision is lowered to gain market share, or if quality is reduced or regulatory change is not implemented, what risks does this represent?

Holding an Australian Financial Services licence has complex requirements, particularly when licensing, monitoring and supervising a network of authorised representatives. Balancing the continued investment in people and process essential to appropriate monitoring and supervision with the demands of a commercial enterprise requires good governance and capable management, maturity, sensitivity, honesty and partnership. This goes beyond basic compliance with legal obligations: it is about ensuring the right conversations are had across organisations to promote a culture of quality, client-centric advice and continuing professionalism. In turn, this requires decisions that are about long-term sustainability, to foster a focus on quality advice for today and the future.

Mature conversations about issues such as this go to the core of the type of culture we as an industry believe is not just acceptable, but required in terms of holding a social licence (not just a financial services licence) to operate into the future. Once we are clear on what we need to do to make progress down the path to a profession, we can start to navigate the change process for the benefit of all of our stakeholders.

‘Path to a profession’ scorecard

Taking all of this into account, what might an effective scorecard for progress down a path to a profession look like?

In considering this question, Infocus has devised a model that captures the thinking of our critical stakeholders to evaluate the performance of our business in a holistic way. We call this our ‘Triple C’ model – client, community, and company.

Providing financial advice that empowers clients to live their best life is an honour and a privilege: as well as a responsibility. Our Triple-C model allows us to measure progress towards our ultimate goal of becoming a profession. This also allows us to consciously adjust course along the way in response to outcomes our key stakeholders experience.

And finally…

One last thought. There’s a desperate need for more upgrades to be granted across the industry, meaning the rewarding and recognising of the right behaviours by industry participants that are aligned with becoming a profession. There’s no longer any room for rewarding behaviour such as recruiting the most advisers or having the happiest staff. Don’t get me wrong, I’m sure these metrics have their place. But in an environment where so much needs to change to bring about the professionalisation of financial advice, the leadership to do what’s right, not just what’s popular, is what’s required.

Join the discussion