Working from home has its benefits, but it also has drawbacks. An example of the latter is that occasionally a pile of papers on the desk becomes so precarious that other members of the household demand something be done about them.

Sorting through a teetering pile of documents recently uncovered one that has been referred to numerous times in financial planning articles and presentations but which, on reading again, seems as relevant and pertinent as the day it first became public.

This paper is a reminder of two things. First, how long it has taken to get the industry and the reform process to where it is today; and second, the very clear benefits that will begin to arise from that reform, for everyone in the profession.

The paper is dated August 12, 2010. It was presented to the Financial Services Council’s NextGen 2010 conference by then-managing director and chief executive officer of Count Financial, Andrew Gale. It sets out as clearly as it can be set out how a profession should be structured, how it should function, and what the major benefits are of getting all of that right.

Gale spoke from a position of knowledge: he is a member of a recognised profession – he is an actuary – and has served as president of his professional association, what is today called the Actuaries Institute.

Gale’s 2010 paper references a paper published some three years earlier by the Financial Planning Association of Australia, so some of the concepts in it are a lot older than a decade or two because they had already been in place and working in other professions for many years.

The paper set out some of the benefits for the financial advice industry that were likely to arise for financial planning, and for financial planners, from getting the professional structure right, including:

– Enhancing the client value proposition

– Improving client stability

– Assisting client growth and profitability

– Improving professional confidence

– Helping underpin a credible, strong voice

– Assisting in achieving co-regulation

It’s a very attractive list, a kind of holy grail, and it became a regular reminder of the potential prize for continuing to prosecute the case for an advice profession, even in the face of often intense opposition.

Whenever a change to the regulation of financial advice was proposed, out came the paper. Did a proposal meet the requirements of creating a profession? If yes, then support it. If no, then oppose it or suggest a change. Slowly, slowly, the puzzle started to be assembled.

The passage of the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill through parliament, and the establishment of ASIC’s Financial Services and Credit Panel as the advice industry’s single disciplinary body, is another important piece of the puzzle. It complements and supports the new education standards and the code of ethics as critical elements of a new profession.

There are three pillars that all professions are built on. Gale’s 2010 paper (itself quoting an even earlier paper, Professions in Society, presented to an Institute of Actuaries conference back in 2000) describes these pillars as “normative”, “cognitive” and “organisational”.

The cognitive pillar includes all of the specialised training and education a financial planner needs and is expected to have, including minimum education standards and continuing professional development requirements.

The normative pillar includes ethical standards and the commitment of all practitioners to act for the public good – that is, to put the public good ahead of any personal interests.

And the organisational pillar includes a body with disciplinary powers over members of the profession, in support of all the elements of both the normative and cognitive pillars.

That’s a reasonably academic approach to defining a profession, but reading through it, it’s possible to see the three pillars, to a greater or lesser extent, now exist. Some fine-tuning is inevitable, and we have yet to see the details of how the disciplinary body will function and who will make up its numbers. But minimum education standards are being phased in, and a code of ethics is already in place. These things fertilise the ground in which widespread and deep-rooted behavioural change within the industry can take root.

It is disappointing that many service providers (primarily product manufacturers) still describe advice as “distribution” and financial advisers as “distributors”. Some organisations take a lot longer than others to catch on to what’s happening, and outdated KPIs inevitably drive old-fashioned behaviour.

It’s worth noting that all of the things that have been laid as a foundation for a financial planning profession had to be created by legislation. Most of them were whipped up after excruciatingly uncomfortable public inquiries rather than emerging organically from within the community of financial advisers.

On one hand that is why it has taken (or will have taken) more than a decade and a half from when Gale delivered his paper to when the last of the education standards is in place; on the other hand it’s probably the only reason most of these changes have happened at all.

But that doesn’t change the facts that many of the changes that were needed have been made, and that financial planning is more clearly recognisable as a profession today than it ever has been before.

It’s now up to each and every individual adviser to choose how they respond. Accept and embrace the idea that behaviour and adherence to a code of ethics and professional standards will dictate whether or not there’s a future in the profession; or continue to try to preserve the status quo and the pre-profession way of doing things.

One comment on “The seeds of a profession have been sown”
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    Great thought leadership Simon – thank you.
    “But minimum education standards are being phased in, and a code of ethics is already in place. These things fertilise the ground in which widespread and deep-rooted behavioural change within the industry can take root.”

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