When the Financial Planning Association (FPA) in late March launched its 2016 national consumer campaign extoling the virtues of the Certified Financial Planner (CFP) designation it served to generate a flurry of comments on the Money Management website, many of them critical of the FPA.
Notwithstanding the fact that the advertising campaign represented nothing more nor less than the annual restatement of the FPA’s long-held value proposition with respect to the CFP designation, the critics were quick to point out that things will likely change if, and when, the Government’s Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015 becomes law.
However, whatever the critics may say about the CFP designation, there can be no doubting that it has served the FPA well. While it has undoubtedly acted as a driver for FPA membership, it has also provided a benchmark with respect to higher educational standards for financial planners, albeit there are those who argue that it is compromised because some planners were grandfathered into the designation when it was first introduced.
So for the time being, at least, the CFP designation represents a marketing tool via which the FPA can claim that holders represent the “highest education and ethical standards in the profession”.
When the Corporations Amendment (Professional Standards and Financial Advisers) legislation becomes law, the CFP designation will continue to be relevant but it remains to be seen whether it loses some of its gloss and some of the commercial advantage it unquestionably delivers the FPA.
That gloss will be lost if the legislation gives rise to a situation within which the CFP designation becomes subordinate to the degree qualifications held by advisers.
It is worth reflecting that the new legislation proposes that all new financial advisers will be required to hold a degree, undertake a professional year, and then pass an exam and that the industry will be overseen by “an independent industry-established standard setting body, operational from 1 July 2016, that will develop and set education standards, professional year requirements, continuing professional development requirements and develop a comprehensive code of ethics for financial advisers”.
There seems little doubt that the FPA will be represented on the new standards setting body, but so too will the Association of Financial Advisers (AFA), consumer representatives and other stakeholder representatives, so it remains to be seen where the CFP designation, controlled as it is by the FPA, will sit within the broader lexicon of financial planners’ academic achievements.
What seems certain, though, is that notwithstanding a transitionary process there will be none of the grandfathering which has been viewed as devaluing the CFP designation.
The draft legislation makes clear that existing advisers will be provided a transition process and will be required to complete an appropriate degree equivalent (or have a recognised transition pathway determined by the independent standard setting body) and pass an exam. In other words, while experience and prior learning will be taken into account at the discretion of the standards-setting body, they will need to be combined with proof of relevant academic achievement.
