In the third and final part of a series focusing on notable Certified Financial Planners (CFPs), Randall Stout reflects on the support he received to complete his CFP studies, and the obligation that licensees have to nurture the development of a profession.
Randall Stout is incredulous: “A listed company making $8 to $10 billion profit a year, [that is] not going to support staff to maintain a professional association? That is just ridiculous.”
Stout is talking about the obligation a financial planning licensee owes to financial planners if the licensee insists that the planners achieve a minimum standard of education and professional qualification. Stout’s firm, the Perth-based HPH Financial Solutions, is a Financial Planning Association Professional Practice. The firm’s four owners are Certified Financial Planners (CFPs), and the firm is currently funding the education of one staff member to CFP status and two more to “the standards we require”.
Stout says that when he was completing the CFP program, his employer, a bank, “supported my professional membership and covered all the courses”.
“Sounds like they’re still supporting the education expense, but I’m hearing from bank planners that the banks have stopped reimbursing FPA membership,” Stout says.
“NAB, I know, stopped it last year. Maybe it’s changed since then because they’ve announced they want all their planners to be CFPs by 2017; I’m assuming that means they’ll cover the subscription cost.
“But a bank that makes a $10 billion profit but can’t afford a $700 membership for their advisers that they want to operate at the highest levels? It just astounds me.
“We’re a small business. We’ve got one girl going through CFP and we’ve got two guys studying to meet the standards that we require. We’re funding all those costs, and we’re a small business.”
Encouraged and supported
Stout says that attaining a professional designation should be encouraged and supported by employers; and those who hold a professional designation should be lauded by their own profession and recognised by the public. He says that’s how it is in other professions, and that’s how it should be in financial planning.
“When I say I’m a Certified Practising Accountant [CPA] I don’t get many queries, because that means I had to do my degree in accounting and five graduate units and two CPAs had to sign off on me that I’m competent at what I do,” he says.
“CPA is marketed well – it just means ‘professional’. “CPA has been marketed better than CFP, but I think that’s changed. I think CFP means something now. It’s starting to be marketed a lot better than it used to be.
“I know CPA and CA have their own designation for financial planning. I could be a CPA specialist adviser, but I think CPA is accounting; CFP is financial advice.
“To me it’s very clear that if I’m a CPA I have an accounting professional qualification, and when I say CFP that means I have a professional financial planning qualification. I’ve not only done the study, I’ve got a professional body that I am part of that stands behind me but also holds me to account, and I think that’s the most important point.”
Role of professional designations
Stout says the self-regulatory nature of professional associations, and the role of professional designations, isn’t always appreciated by the public.
“You can be booted out of [being] a CFP – I mean, I just won their national [CFP Professional of the Year] award, but I can be stripped of my membership if I do not follow their code of conduct,” he says.
“If there are bad apples out there who are members of our profession then I can report them to the FPA and the FPA can investigate them.
“For the consumer, isn’t that hugely important? To know that we self regulate? And if some eon is a rubbish adviser, that they’ll be turned out of the profession. How could you be an adviser with no membership of a professional association? How can you do that?”
Stout says it is unimaginable to him that an accountant would want to operate without being a member of a professional association, and without using the attendant postnominal letters.
“It just wouldn’t happen,” he says.
“Yes you can do it; but it’s unheard of in accounting, and it should be unheard of [in financial planning].”
Not all created equal
A side effect of consumers not fully understanding the significance of the CFP designation is that they can’t fully distinguish between the different programs that planners can choose from. And even within consistently named qualifications – such as a Master of Financial Planning – not all programs are created equal.
“The CFP is the highest standard in the land, and it’s the highest standard by a long way,” Stout says.
“I don’t know enough about the [Association of Financial Advisers’] designation. My comment would be that AFA is an industry association; FPA is clearly a professional association, representing our members.
“Good luck to them. Any increase in standards is a good thing, but … I think it’s a lot harder to become a CFP than their designation.” Stout says there should be greater recognition of individuals who have attained the CFP designation.
“These are mums who leave their kids, and the dad’s a stay-at-home-dad, and they’re going to work and they’re studying, and they get their CFP. Bloody hell, they deserve recognition,” he says.
“So at congress we recognise them, and at chapter meetings if you’re a new CFP come along as out guest and we’ll recognise your achievement. Five postgraduate units plus now a degree in finance as a minimum, or a Master of Financial Planning – that’s an achievement. That is raising the standards.”
Protecting an investment
Stout says spending a considerable amount of money each year on staff training isn’t an expense but an investment. But it has to be structured smartly to protect that investment.
“If people come to us, get all their accreditation and leave, we’ve got clawback clauses in our employment contracts that protect us,” Stout says.
“But I’m happy to spend $5000 to $10,000 a year on education for my team, because the business benefits and we have better qualified planners operating to the highest levels.
“We’re not going to make it easy for people to join us and become advisers, because we’ve got our own licence so we carry the can if bad advice is given. How do you stop bad advice being given? Require your staff to be CFPs.”
At a loss
Stout says he is at a loss to explain why a firm would not invest in raising the professional standards of all of its staff.
“Help me understand why you wouldn’t invest,” he says.
“I’d rather pay a little bit less [in salaries] but pay more in education costs to get them there, and then they become more valuable. That’s an investment in people, which is an investment in your business.”
Stout says HPH gives its staff study leave, and once they attain AFP status the firm will also pay for them to attend the FPA congress.
“So we give them time, we give them time off to do the exams; we reimburse their costs; and we give them a conference trip – because then they’re associating with the best of the best.”
