Lifting financial planning professionalism requires patience

The Financial Planning Association seems determined to “raise the bar” on professionalism in the industry, but as Mike Taylor reports, this might take much longer than just a few years.

When the Financial Planning Association (FPA) held its annual conference in Brisbane last week, it was the proud claim of its chief executive Mark Rantall that it was being attended by more practitioner members than at any time in the past.

Given the key decisions taken by the FPA earlier this year to become a professional association, Rantall might have been disappointed if a larger number of practitioner members had not been attending the conference.

But for all that the theme of the conference was “raising the bar”, and that both Rantall and FPA chairman Matthew Rowe exhorted delegates to embrace professionalism and earn the respect of the Australian public, the conference exhibition hall was still largely inhabited by product manufacturers – making it difficult to argue that the link between product sales and advice can ever be entirely broken.

What was clear from the words of Rowe and Rantall is that their vision for the FPA is that it will become the financial services equivalent of the Australian Medical Association (AMA) – a professional body fully supported by a membership of professionals.

However, something which also became clear from the words of both men is that they were hoping they might extract from the Government’s Future of Financial Advice (FOFA) process legislation restricting the use of the term “financial planner” to those who are appropriately qualified and who are members of a suitable professional body.

As Rowe told the conference, he wanted to see the emergence of an environment in which the Australian Securities and Investment Commission did not announce the banning of financial planners because the ethical standards of the profession were being maintained by the professionals themselves.

What Rowe wants to see is an environment in which the discipline of professional financial planners is maintained by the ethical pressure of their peers. 

Rantall, in exhorting those attending the FPA conference to support the organisation in its crusade towards professionalism, told delegates that the FPA “had their back”.

He said that during the process of the Government’s drive towards the implementation of its FOFA legislation, representatives of the FPA had attended more than 100 meetings, and that this is reflective of the organisation “having the backs of its members”.

However, there is plenty of evidence to suggest that while the FPA has worked hard to maintain a viable relationship with the Government on FOFA, little of this effort was reflected in the shape and content of the first tranche of the legislation, particularly the eleventh hour inclusion of an exacting fee disclosure requirement.

Rantall has made clear to the Government that the FPA cannot support the first tranche of the legislation, but it was evident that the organisation was hoping it might be able to support most, if not all, of the second tranche.

Something which would secure that support, and represent a major win for Rantall, would be the Government delivering not only the legislative restriction on the term “financial planner”, but also the endorsement of the FPA as the professional organisation of choice for the industry.

While the FPA has followed a conventional strategy in dealing with the Government on FOFA, the Financial Planning Association (AFA) has adopted an approach so robust that the Minister has made his displeasure clear.

However, in circumstances where both the FPA and the AFA have found themselves rejecting the first tranche of the FOFA legislation, there exists a perception that the more conventional approach pursued by Rantall and Rowe has not entirely paid dividends.

This, of course, is unfair but Shorten now needs to deliver something tangible which the FPA can take to its members as absolute proof that it does, indeed, “have their backs”.

The measure of the success or failure of the FPA’s lobbying approach will be contained in the second tranche of the FOFA legislation and Rantall and Rowe will be hoping that it includes a specific approach referencing the use of the term “financial planner”.

In the event that the Government ultimately delivers on the FPA’s agenda, the challenge for the organisation will be to deliver on its promise to create a profession which carries the trust of the Australian public.

This will not be easy in circumstances where the term “financial planner” or “financial adviser” have become generic, and where bodies such as the Industry Super Network continue to pursue advertising campaigns which question the value of advice and the role of financial planners.

With or without Government support, the FPA’s noble objective of creating a genuine profession seems likely to be something achieved over decades, rather than a few years.