Sensationalised stories in the news have created a domino effect.
Some of Australia’s largest institutions are getting behind many of the recommendations in the FPA White Paper and FPA 10 Point Plan we published earlier this year. Some of our recommendations are aspirational, but they are also achievable with the key parties on board.
What we’ve seen this year are some major milestones and a shift in thinking. The penny has dropped and the leadership shown by the big players only fuels our fight to raise education and professional standards.
The driving force behind this fight is the fundamental lack of consumer trust. Until we secure the trust of Australians, we will not secure the future of our profession.
Trust doesn’t happen overnight. It has to be earned. While we have no level playing field and insufficient regulation around education and professional conduct, consumer trust will remain a distant dream.
The current landscape
The FPA has made several submissions over the past months, most recently to the Parliamentary Joint Committee (PJC), outlining our recommendations on lifting the educational and professional standards of financial planners in Australia. Designed to advance the profession of financial planning, the PJC Inquiry examines financial planner education, professional standards and ethics, and recognition of professional bodies.
Our recommendations focused heavily on a minimum degree qualification to become a new financial planner/adviser in Australia and recognition of the role played by professional bodies in assisting with consumer protection and confidence. Consumers deserve this and more, which is why it’s critical we secure the right outcomes.
The current landscape falls short in many ways:
• Education standards to become a financial planner/adviser are too low.
• The structure and requirements of ASIC’s RG146 are inappropriate in today’s environment.
• There is no holistic education framework for the financial planning profession.
• Approximately 76% of authorised representatives provide financial advice to consumers, without a requirement to comply with the professional standards of ethics, conduct and education.
The proof is in the pudding
We can keep debating these points, but the proof really is in the pudding. Since 2009, the FPA has collected data on ASIC enforcement action concerning individuals in relation to financial advice. This data shows that FPA members represent significantly less than 5 per cent of the overall ASIC enforcement action each year – even though they represent nearly 50 per cent of financial planners in Australia.
In my mind, there is no stronger case for raising standards across the profession. It’s the only way we will ever provide consumers the protection they deserve. When the numbers are black and white, so is the argument.
While we work hard to secure the financial future of Australians, and the future of our profession, we will always ensure we respect the many financial planners who entered the profession in it’s infancy.
The majority have delivered great work ever since. In our submission to the PJC, we also made recommendations on appropriate transition and pathway options for existing financial planners. We see this as part of the solution.
The measures we’ve called for may seem far-reaching. But the reality is, to live up to the expectations of our profession, all government, industry bodies and the financial planning community must unite in purpose and proudly stand with Australians for a better financial future.
Mark Rantall is chief executive officer of the Financial Planning Association. A CPA and CFP, Mark was appointed by the FPA Board in 2010 to lead the FPA in raising the standing of Australia’s professional financial planners.
Prior to the FPA, Mark was involved in the creation of The NAB Academy and held the post of Dean of Advice at the National Australia Bank after serving as managing director of Godfrey Pembroke from 2003 to 2008. In this role, Mark successfully facilitated more than 200 Godfrey Pembroke advisers to transition to a fee-for-service remuneration model.
